https://cpw.cvlcollections.org/files/original/6bb3a8455edc32bf8061b8a5316c2b59.pdf 0747601601ce60a146aa9981ab10eb09 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2025 and 2024 �LEGISLATIVE AUDIT COMMITTEE Representative William Lindstedt Chair Senator Lisa Frizell Vice Chair Representative Max Brooks Senator Rod Pelton Representative Jarvis Caldwell Senator Mike Weissman Senator Dafna Michaelson Jenet Representative Jenny Willford OFFICE OF THE STATE AUDITOR Kerri L. Hunter, CPA, CFE State Auditor Marisa Edwards, CPA Deputy State Auditor Lillian Adams Contract Monitor Eide Bailly LLP Contractor REPORT NUMBER 2522F �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2025 MEMBERS Mina Liebert – Chair Pamela Denahy Leticia Martinez Charles Garcia John Montepare Mo Siegel Craig Hughes Brenda May Krithika Prashant Patty Imhoff Tom Lee Carrie Curtiss Jahi Simbai Mara Brosy-Wiwchar Ray Tschillard Dan Gibbs Bobby Massie Jay Tutchton Marie Haskett �September 25, 2025 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2025 and 2024. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, Eide Bailly LLP eidebailly.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 2 Disposition of Prior Year Audit Findings and Recommendations ........................................................... 5 Independent Auditor’s Report .................................................................................................................. 6 Management’s Discussion and Analysis .................................................................................................. 9 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2025 ................. 17 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2024 ................. 18 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2025 ............................... 19 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2024 ............................... 20 Notes to Financial Statements .................................................................................................... 21 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2025 ..................................... 40 Budgetary Comparison Schedule – For the Year Ended June 30, 2024 ..................................... 41 Notes to the Required Supplementary Information .................................................................... 42 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 43 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 45 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2025 and 2024 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP (“Contract Auditors”) to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2025 and 2024. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from June 2025 through September 2025. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2025; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated September 25, 2025 has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2025 and 2024, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated September 25, 2025, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no findings or recommendations reported for the year ended June 30, 2025. SUMMARY OF PROGRESS IN IMPLEMENTING PRIOR AUDIT RECOMMENDATIONS There was one finding and recommendation that related to internal control over financial reporting for the year ended June 30, 2024. This finding was implemented, see the Disposition of Prior audit Findings and Recommendations section of this report for further information. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2025 and 2024 The Great Outdoors Colorado Trust Fund and the State Board (“GOCO”), which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2025 was the thirty-second year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, Senate Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2025, the State Board that oversees GOCO consists of a total of nineteen members: two members of the public from each of the eight congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2025, GOCO had a permanent staff of 22 and received $84.9 million in net Lottery proceeds, which is $1.1 million below the maximum allowable for Fiscal Year 2025 but $3.1 million higher than Lottery proceeds received in Fiscal Year 2024. During Fiscal Year 2024, GOCO had a permanent staff of 23 and received $81.8 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2024. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2025 and 2024 • For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. As shown in the tables below and on the following page, GOCO complied with the above policy on authorized and expended grants as of Fiscal Year 2025. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2030). GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represent the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2025 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total % Grants Expended Amount % Cumulative Difference $ 428,353 24.9% $ 385,535 24.8% 427,197 24.8 388,740 25.1 38,457 423,185 24.5 388,154 25.0 35,031 444,647 25.8 389,762 25.1 54,885 $ 1,723,382 100.0% $1,552,191 100.0% Source: Data provided by GOCO -3- 42,818 $ 171,191 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2025 and 2024 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2025 FiveYear Change Funding Purpose 2021 Grants Authorized % 2022 2023 2024 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.7% 24.6% 24.8% 25.0% 24.9% 0.2% 24.7 24.8 24.9 24.7 24.8 0.1% 24.3 24.6 24.6 24.4 24.5 0.2% 26.3 26.0 25.7 25.9 25.8 (0.5%) 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years FiveYear Change Funding Purpose 2021 Grants Expended % 2022 2023 2024 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.8% 24.9% 24.9% 24.9% 24.8% 0.0% 24.0 24.2 24.4 24.7 25.1 1.1% 25.1 24.9 25.3 25.2 25.0 (0.1)% 26.1 26.0 25.4 25.2 25.1 (1.0)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -4- 2025 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Disposition of Prior Year Audit Findings and Recommendations For the Years Ended June 30, 2025 and 2024 The following table presents the recommendation from the June 30, 2024 audit and its disposition: Recommendation Number 2024-001 Fiscal Year Ended June 30, 2024 Recommendations The Great Outdoors Colorado (GOCO) should strengthen its internal controls over financial reporting to ensure grant expenditure accounting transactions are correctly recorded and reported in accordance with GOCO’s Grant Expenditure Recognition Policy. Status Implemented 5 �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities and the major fund of the Great Outdoors Colorado Trust Fund (GOCO), as of and for the year ended June 30, 2025 and 2024, and the related notes to the financial statements, which collectively comprise the GOCO’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of GOCO as of June 30, 2025 and 2024, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of GOCO and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Adoption of New Accounting Standard As discussed in Note 2 to the financial statements, GOCO has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences, for the year ended June 30, 2025. As a result of implementing the standard, there was no effect on the governmental activities and the major fund’s beginning fund balance or net position as of July 1, 2024. Our opinions are not modified with respect to this matter. eidebailly.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE 6 �Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. 7 �Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis, and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Members of the State Board of the Great Outdoors Colorado Trust Fund and the Description of the State Board of the Great Outdoors Colorado Trust Fund but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 25, 2025 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado September 25, 2025 8 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal Years Ended June 30, 2025 and 2024. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 17. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2025, Fiscal Year 2024, and Fiscal Year 2023. 2025 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2024 2023 2025/2024 $ Variance % 2024/2023 $ Variance % $84,904,766 $81,771,604 $75,706,639 $3,133,162 3.8% $6,064,965 8.0% $72,605,510 $53,403,709 $72,545,099 $19,201,801 36.0% ($19,141,390) (26.4%) 2025 GOCO received $84.9 million in Lottery proceeds for Fiscal Year 2025, which is $1.1 million below the maximum allowable Lottery proceeds of $86.0 million as set by the constitutional cap. Despite coming in under cap, this amount is $3.1 million higher than the Lottery proceeds received in Fiscal Year 2024. The Fiscal Year 2025 cap of $86.0 million represents a $4.3 million increase over Fiscal Year 2024, due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Under Article XXVII, Section 3 of the Colorado Constitution, GOCO’s Lottery proceeds are capped at $35 million in 1992 dollars, adjusted annually for inflation. Grant expenditures increased by $19.2 million compared to Fiscal Year 2024. These expenditures fluctuate from year to year, depending on how funds are programmed in the five-year spending plan and on the timing of project completions. Total Fiscal Year 2025 actual expenditures exceeded final budgeted expenditures by $6.5 million, primarily due to grant expenditures surpassing expectations. While GOCO carefully projects grant expenditures each year, it has limited control over the precise timing of grant payments beyond what is established in grant agreements. 2024 GOCO received its maximum allowable Lottery proceeds for the year of approximately $81.8 million, per the constitutional cap. This represents a $6.1 million increase over Fiscal Year 2023 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 Grant expenditures decreased by $19.1 million from Fiscal Year 2023. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the five-year spending plan and because of timing differences of project completions. The total Fiscal Year 2024 actual expenditures were below budgeted expenditures by $13.0 million due to expenditures for grants and personnel services and benefits both coming in below budget. Although we do our best to project grant expenditures for the year, it is important to note that GOCO does not have much control over the timing in which grants get paid out beyond the timeframe delineated in grant agreements. Personnel services and benefits are below budget expectations due to staff vacancies throughout the year. Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is constitutionally capped at $35 million in 1992 dollars, adjusted annually for inflation. This cap was $81.8 million in Fiscal Year 2024 and $86.0 million in Fiscal Year 2025. In Fiscal Year 2024, any Lottery proceeds received above the cap were distributed annually to four funds: the Outdoor Equity Fund, the Public School Capital Construction Assistance Fund, the Wildlife Cash Fund, and the Parks and Outdoor Recreation Cash Fund. In Fiscal Year 2025, the Colorado Legislature enacted House Bill 25-1215 (Redistribution of Lottery Fund), which restructured how excess Lottery proceeds are allocated. Beginning with the 2024-25 state fiscal year and each year thereafter, any Lottery proceeds received above the constitutional cap were to occur in two steps: Fixed allocations are made first: $4.0 million to the Outdoor Equity Fund, $3.0 million to the Public School Capital Construction Assistance Fund, and then $750,000 to the Development Cash Fund. Remaining funds are then distributed based on the total available in one of two ways: - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 If $20 million or less remains: 50% to the Public School Capital Construction Assistance Fund, 20% to the Parks and Outdoor Recreation Cash Fund, 20% to the Wildlife Cash Fund, and 10% to the Outdoor Equity Fund. If more than $20 million remains: 50% to the Public School Capital Construction Assistance Fund,15% to the Parks and Outdoor Recreation Cash Fund,15% to the Wildlife Cash Fund, 10% to the Outdoor Equity Fund, 5% to the Development Cash Fund, and 5% to the Infrastructure Cash Fund. Because Lottery proceeds in Fiscal Year 2025 did not exceed the constitutional cap, no excess distributions were made. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2025, 2024, and 2023. 2025 $ 125,589,970 357,342 125,947,312 June 30, 2024 $ 113,807,810 442,266 114,250,076 Other liabilities Compensated absences Long-term leases and subscriptions Total liabilities 9,823,221 277,653 354,334 10,455,208 9,266,531 174,008 445,175 9,885,714 14,010,885 155,725 574,231 14,740,841 Net investment in capital assets Unrestricted Total net position 3,008 115,489,096 115,492,104 (2,909) 104,367,271 $ 104,364,362 942 79,292,481 79,293,423 Current and other assets Capital assets, net Total assets $ $ $ 2023 93,459,091 575,173 94,034,264 2025 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable, and advanced grants payments. Cash decreased by approximately $18.7 million during Fiscal Year 2025 due to an increase in Lottery proceeds receivable at year end and also due to an increase in grant payments and new loans made during the year. The Lottery proceeds receivable increased by approximately $17.1 million from June 30, 2024. The constitutional cap was not met in Fiscal Year 2025, therefore proceeds for April through June, which are distributed quarterly, will be received after the end of the fiscal year. Notes receivable increased by $15.0 million due to two new loans issued during Fiscal Year 2025 totaling $16.5 million and the partial repayment of a note in the amount of $1.5 million (Note 6). Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, Planning and Capacity, Restoration and Stewardship of Outdoor Resources and Environment (“RESTORE”), Community Impact, Stewardship Impact, and Centennial Grant programs. These advances will be recognized as grant expenses once the contractual obligations are met by the grantees. - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 As of June 30, 2025, other liabilities increased by approximately $556,690 from June 30, 2024. The liabilities outstanding at the end of Fiscal Year 2025 consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated March through June 2025 investments of approximately $7.9 million, an increase of approximately $141,979 from the prior year. Effective as of July 1, 2024, GOCO adopted provisions of GASB Statement No. 101 Compensated Absences. As a result of this change in accounting principle, it was not appropriate for GOCO to restate prior-period information for earlier periods than those presented in the basic financial statements. Therefore, information for the year ended June 30, 2024 was not restated. See Note 2 to the financial statements for further information on the change in accounting principle. The capital assets and long-term liabilities reported for Fiscal Year 2025 decreased by $84,924 and $90,841, respectively. The decreases are due to the annual amortization of the lease and subscription assets and liabilities due to the implementation of GASB 87, Leases, and GASB 96, Subscription-Based Information Technology Arrangements (“SBITA”), which requires governments to recognize an asset and liability for right-to-use assets under long-term lease and subscription agreements. The asset and related liability are amortized over the life of the lease or subscription. 2024 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable, and advanced grants payments. Cash increased by approximately $13.4 million during Fiscal Year 2024 due to an increase in Lottery proceeds and a decrease in grant payments made during the year. The Lottery proceeds receivable increased by approximately $3.2 million from June 30, 2023. Notes receivable increased by $2.0 million from a note issued in October 2023. There were no notes outstanding at the end of Fiscal Year 2023. The constitutional cap was met later in the year therefore the balance of proceeds, which are distributed quarterly, will be received after the end of the fiscal year. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, Restoration and Stewardship of Outdoor Resources and Environment (“RESTORE”), and Stewardship Impact programs. These advances will be recognized as grant expenses once the contractual obligations are met by the grantees. As of June 30, 2024, other liabilities decreased by approximately $4.7 million from June 30, 2023. The liabilities outstanding at the end of Fiscal Year 2024 consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated March through June 2024 investments of approximately $7.7 million, a decrease of approximately $4.4 million from the prior year. Compensated absences increased slightly due to an increase in staff accruing vacation during the year. The capital assets and long-term liabilities reported for Fiscal Year 2024 decreased by $132,907 and $129,056, respectively. The decreases are due to the annual amortization of the lease and subscription assets and liabilities due to the implementation of GASB 87, Leases, and GASB 96, Subscription-Based Information Technology Arrangements (“SBITA”), which requires governments to recognize an asset and liability for right-to-use assets under long-term lease and subscription agreements. The asset and related liability are amortized over the life of the lease or subscription. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2025, 2024 and 2023. Fiscal Years Ended June 30, 2025 2024 2023 $ 84,904,766 $ 81,771,604 $ 75,706,639 5,135,926 3,065 90,043,757 2,274,545 9,162 85,066 84,140,377 (151,650) 2,851 3,667,701 79,225,541 Program expenses Grants expended Personnel services and benefits Operating Total expenses 72,605,510 2,865,010 3,445,495 78,916,015 53,403,709 2,655,935 3,009,794 59,069,438 72,545,099 2,548,490 2,971,095 78,064,684 Change in net position Beginning net position 11,127,742 104,364,362 25,070,939 79,293,423 1,160,857 78,132,566 Ending net position $ 115,492,104 $ 104,364,362 $ 79,293,423 Program revenues Lottery revenue General revenues Investment earnings (loss) Miscellaneous income Project reimbursements Total revenue 2025 Although GOCO did not meet the constitutional cap for Fiscal Year 2025, Lottery net proceeds increased by approximately $3.1 million from Fiscal Year 2024. Investment earnings in Fiscal Year 2025 were $5.1 million, and the Fiscal Year 2024 investment earnings were $2.3 million, resulting in an increase in investment earnings of $2.8 million. Grant expenditures in Fiscal Year 2025 increased by $19.2 million from Fiscal Year 2024. This increase is primarily due to the timing of project completions and grantee reporting during the year. As anticipated, GOCO grant expenditures in Fiscal Year 2025 started to show an increase, as most of the large Centennial Program grants, GOCO’s strategic initiative within its 2020 Strategic Plan, were awarded in March 2024. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2024 due to anticipated increases in staffing and salaries as well as an increase in travel and meeting expenditures as GOCO continues to support the regional program model. In addition, GOCO’s operating expenses increased by approximately $435,701 due to some one time increases related to the new strategic plan, brand awareness survey, and Generation Wild marketing campaign expenses. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 2024 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2024 were $2.3 million, and the Fiscal Year 2023 net loss was $151,650, resulting in an increase in investment earnings of $2.4 million. During the year, GOCO received $85,066 in project reimbursements from a grantee for the payment of cash in lieu of condemnation by a public utility of conserved properties previously funded by GOCO, as stipulated in the grantee’s grant agreements from prior years. Grant expenditures in Fiscal Year 2024 decreased by $19.1 million from Fiscal Year 2023. This decrease is primarily due to the timing of project completions and grantee reporting during the year. GOCO anticipates that grant expenditures will start to increase in Fiscal Years 2025 – 2027, as the majority of the large Centennial Program grants were awarded in March 2024. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2023 due to anticipated increases in staffing as well as an increase in travel and meeting expenditures as we continue to implement the regional program model. Budgetary Highlights 2025 During Fiscal Year 2025, GOCO amended its operating budget to increase expenditures related to the Generation Wild marketing campaign (Note 10). This amendment increased total budgeted expenditures by $283,756 and was just a matter of timing as these funds were reallocated from the Fiscal Year 2026 operating budget, so that in total, there is no increase in expenditures over the two years. Capital Assets and Debt Administration Capital Assets (See Note 7) The following table reflects capital assets at year-end net of depreciation and amortization as of June 30, 2025, 2024 and 2023. Furniture and equipment Leasehold improvements Intangible assets Leased assets Subscription assets Total, net capital assets $ 2025 15,024 32,416 294,858 15,044 $ 357,342 - 14 - $ $ 2024 24,308 32,416 378,330 7,212 442,266 $ $ 2023 33,594 1,763 32,416 503,065 4,335 575,173 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 2025 GOCO reported net capital assets of $357,342 for Fiscal Year 2025. This amount represents a net decrease of $84,924 from Fiscal Year 2024. The most significant reason for this decrease was due to the depreciation of subscription and leased assets added in the implementation of GASB 96, SBITAs and GASB 87, Leases. The balance of the leased and subscription assets was $294,858 and $15,044, respectively, net of accumulated amortization for Fiscal Year 2025. 2024 GOCO reported net capital assets of $442,266 for Fiscal Year 2024. This amount represents a net decrease of $132,907 from Fiscal Year 2023. The most significant reason for this decrease was due to the depreciation of subscription and leased assets added in the implementation of GASB 96, SBITAs and GASB 87, Leases. The balance of the leased and subscription assets was $378,330 and $7,212, respectively, net of accumulated amortization for Fiscal Year 2024. Long-term Lease and Subscription Liabilities 2025 GOCO reported long-term leases and subscriptions of $354,334 for Fiscal Year 2025, a decrease of $90,841 over Fiscal Year 2024 (see Note 9). This decrease is primarily due to the amortization of the lease liabilities previously recorded through the implementation of GASB 87, Leases and GASB 96, SBITAs. 2024 GOCO reported long-term leases and subscriptions of $445,175 for Fiscal Year 2024, a decrease of $129,056 over Fiscal Year 2023 (see Note 9). This decrease is primarily due to the amortization of the lease liabilities previously recorded through the implementation of GASB 87, Leases and GASB 96, SBITAs. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $83.6 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2026. Although the constitutional cap has historically been met, Fiscal Year 2025 was the first year in over two decades that the constitutional cap was not reached, therefore GOCO will continue to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to continue increasing as funds for the larger Centennial Program, a program focused on once-in-a-generation, high-impact land acquisition, capital, and stewardship projects across Colorado, were awarded in March 2024 and are projected to be expensed in the upcoming couple of years. As GOCO enters the first year of its new 2025 Strategic Plan and five-year spending plan (Fiscal Years 2026 – 2030), focus will be on the following programs established under the 2025 Strategic Plan: Community Impact, Land Acquisition, Planning and Capacity, Stewardship Impact, Generation Wild, Conservation Service Corps, Transaction Cost Assistance, RESTORE Colorado, and Regional Partnerships Initiative. - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2025 and 2024 The new five-year spending plan is structured to prioritize compliance with GOCO’s constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (Article XXVII). In Fiscal Year 2026, GOCO anticipates awarding significant funding for Generation Wild, to be expended over Fiscal Years 2026–2030 and making an annual investment in the Regional Partnerships Initiative, with a specific emphasis on funding projects that advance the goals of Colorado’s Outdoors Strategy. GOCO is budgeting $6.9 million for Fiscal Year 2026 operating expenditures. The modest increase from the prior year is primarily due to the continued rollout of the regional program model and includes necessary adjustments for staff salaries and a limited number of planned promotions. The Fiscal Year 2026 budget also includes a strategic investment in the Generation Wild marketing campaign, consistent with the current five-year spending plan. 2026 budgeted operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay $ 3,221,761 1,267,276 2,293,244 74,000 Total 2026 Budgeted Operating Expenditures $ 6,856,281 - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2025 Adjustments (Note 3) Statement of Net Position $ - $ 84,193,294 20,264,059 17,115,740 133,963 19,441 3,863,473 357,342 357,342 357,342 $ 125,947,312 9,452,837 370,384 - 111,061 9,452,837 370,384 111,061 - 166,592 195,282 159,052 166,592 195,282 159,052 Total liabilities 9,823,221 631,987 10,455,208 Fund balances/Net position Fund balances Nonspendable Assigned 133,963 115,632,786 (133,963) (115,632,786) - Total fund balances 115,766,749 (115,766,749) - Net position Net investment in capital assets Unrestricted 3,008 115,489,096 3,008 115,489,096 Total net position $ 115,492,104 $ 115,492,104 General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation and amortization Total assets $ 84,193,294 20,264,059 17,115,740 133,963 19,441 3,863,473 $ 125,589,970 Liabilities Grants payable Accounts payable Compensated absences payable, current Long-term liabilities Compensated absences payable Due within one year Due in more than one year Total liabilities and fund balances $ $ 125,589,970 See Notes to the Financial Statements - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2024 Adjustments (Note 3) Statement of Net Position $ - $ 102,913,146 3,183,797 2,090,740 91,226 19,394 5,509,507 442,266 442,266 442,266 $ 114,250,076 9,109,510 157,021 69,603 - 9,109,510 157,021 69,603 104,405 - 160,330 284,845 104,405 160,330 284,845 Total liabilities 9,440,539 445,175 9,885,714 Fund balances/Net position Fund balances Nonspendable Assigned 91,226 104,276,045 (91,226) (104,276,045) - Total fund balances 104,367,271 (104,367,271) - General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation and amortization Total assets $ 102,913,146 3,183,797 2,090,740 91,226 19,394 5,509,507 $ 113,807,810 Liabilities Grants payable Accounts payable Compensated absences payable, current Long-term Liabilities Compensated absences payable Due within one year Due in more than one year Total liabilities and fund balances $ $ 113,807,810 Net position Net investment in capital assets Unrestricted (2,909) 104,367,271 (2,909) 104,367,271 Total net position $ 104,364,362 $ 104,364,362 See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2025 Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay General Fund Adjustments (Note 3) Statement of Activities $ $ $ 72,605,510 2,587,357 3,451,412 105,044 277,653 (5,917) (105,044) 72,605,510 2,865,010 3,445,495 - Total expenditures/expenses 78,749,323 166,692 78,916,015 Program revenues - State Lottery proceeds 84,904,766 - 84,904,766 Net program revenues (expenses) 6,155,443 General revenues Other income Investment earnings Total general revenues (166,692) 5,988,751 3,065 5,135,926 - 3,065 5,135,926 5,138,991 - 5,138,991 Excess (deficiency) of revenues over expenditures 11,294,434 (166,692) 11,127,742 Other financing sources - leases and subscriptions 105,044 (105,044) - 11,399,478 (11,399,478) - 11,127,742 11,127,742 (2,909) 104,364,362 (274,645) $ 115,492,104 Change in fund balance Change in net position Fund balance/net position - beginning of the year 104,367,271 Fund balance/net position - end of the year $ 115,766,749 See Notes to the Financial Statements - 19 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2024 Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay General Fund Adjustments (Note 3) Statement of Activities $ $ $ 53,403,709 2,655,935 3,005,943 51,046 3,851 (51,046) Total expenditures/expenses 59,116,633 Program revenues - State Lottery proceeds 81,771,604 - 81,771,604 22,654,971 47,195 22,702,166 9,162 2,274,545 85,066 - 9,162 2,274,545 85,066 2,368,773 - 2,368,773 25,023,744 47,195 25,070,939 51,046 (51,046) - 25,074,790 (25,074,790) - 25,070,939 25,070,939 942 79,293,423 (2,909) $ 104,364,362 Net program revenues (expenses) General revenues Other income Investment earnings Project reimbursements Total general revenues Excess of revenues over expenditures Other financing sources - leases and subscriptions Change in fund balance (47,195) 53,403,709 2,655,935 3,009,794 - Change in net position Fund balance/net position - beginning of the year 79,292,481 Fund balance/net position - end of the year $ 104,367,271 See Notes to the Financial Statements - 20 - $ 59,069,438 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 2 - Summary of Significant Accounting Policies (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 2 - Summary of Significant Accounting Policies (continued) Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5–7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. GOCO has recorded lease and subscription assets also known as subscription-based information technology arrangements (“SBITAs”). The lease and subscription assets are initially measured at an amount equal to the initial measurement of the related lease and subscription liability plus any lease and subscription payments made prior to the lease term, less incentives, and plus any ancillary charges necessary to place the underlying asset into service. These assets are amortized on a straight-line basis over the life of the related lease or SBITA. Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours and sick leave is accumulated monthly up to a maximum of 360 hours. In addition, GOCO offers paid time off for sabbatical, military, bereavement, jury duty, and family and medical leave, subject to supervisor approval. The compensated absences liability has been reported in the Government-wide statements for any leave that is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means in the future. This liability is measured using an employee’s pay rate as of the date of the financial statements and includes certain salary related payments that are incrementally associated with payments for leave including employer paid Medicare tax and pension contributions. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. Prepaid items). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. The Board can modify or rescind a commitment of resources through passage of a new resolution. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance recorded in the General Fund column of the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2025 and 2024 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. Net position can include three main categories in the Statement of Net Position column of the Governmental Fund Balance Sheets and Statements of Net Position. Net investment in capital assets consists of capital, lease, and subscription assets, net of accumulated depreciation and amortization. Net position is restricted when constraints placed on net resources are externally imposed. Remaining net position is reported as unrestricted. When both restricted and unrestricted resources are available for use, it is GOCO’s practice to use restricted resources first, then unrestricted resources as they are needed. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 2 - Summary of Significant Accounting Policies (continued) GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Year 2025 was approximately $84.9 million which is $1.1 million below the maximum allowable under the State Constitution. For Fiscal Year 2024 GOCO’s share of Lottery proceeds was approximately $81.8 million, which was the maximum amount allowable under the State Constitution. Implementation of GASB Statements As of June 30, 2025, GOCO adopted GASB 101, Compensated Absences. The provisions of this standard modernize the types of leave that are considered a compensated absence and provides guidance for a consistent recognition and measurement of the compensated absence liability. This liability is reported in the Government-wide financial statements for Fiscal Year 2025. As of June 30, 2024, a liability has been recorded for compensated absences in the Government-wide and fund financial statements as certain conditions of GASB 16, Accounting for Compensated Absences were considered met. There was not a significant effect on GOCO’s financial statements as a result of the implementation of GASB 101, Compensated Absences, so the liability recorded in the fund financials was not amended until the implementation of this standard during Fiscal Year 2025. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The adjustments pertain to capital assets and long-term debt as outlined below. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $357,342 and $442,266 adjustments to capital assets as of June 30, 2025 and 2024, respectively, represent the capital assets of GOCO, net of accumulated depreciation and amortization of leased and subscription assets. Certain liabilities, including compensated absences, lease and subscription liabilities, are not due and payable in the current period and therefore are not reported in the balance sheet. The $354,334 and $445,175 adjustments to long-term lease and subscription liabilities as of June 30, 2025 and 2024, respectively, represent the long-term lease liability of GOCO, net of accumulated amortization. The $277,653 adjustment to compensated absences payable as of June 30, 2025 represents the liability for accrued vacation and sick leave resulting from the implementation of GASB 101, Compensated Absences. - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. This adjustment pertains to compensated absences, capital assets, lease and subscription liabilities. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. The adjustment to compensated absences does not require the use of current financial resources and therefore are not reported as expenditures in the fund financial statements. In addition, certain capital additions were financed through leases and Subscription-Based Information Technology Arrangements (“SBITA”). In governmental funds, a lease or SBITA is considered a source of financing, but in the statement of net position, the lease or SBITA is reported as a long-term liability. This adjustment represents the amount by which depreciation and amortization expense and loss on disposals of assets exceeded capital outlays and lease proceeds in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2025 2024 (9,284) (11,048) (180,684) (172,905) 195,885 180,102 5,917 (3,851) Depreciation expense Amortization of leased and subscription assets Amortization of long-term leases and subscriptions Increase in operating expenses Compensated absences payable Increase personnel services and benefits (277,653) (277,653) - Leased and subscription asset capital outlays Decrease in capital outlay expense 105,044 105,044 51,046 51,046 New lease or subscription liability recorded (105,044) (51,046) Net adjustment to increase (decrease) net change in fund balance to arrive at change in net position (271,736) (3,851) Change in fund balance 11,399,478 25,074,790 Change in net position 11,127,742 25,070,939 - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2025, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2025 Bank Balance $ 664,926 Carrying Balance $ 234 635,452 $ $ 664,926 635,686 As of June 30, 2024, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2024 Bank Balance $ 331,511 Carrying Balance $ 345 296,375 $ $ 331,511 296,720 Because GOCO’s deposits are either Federal Deposit Insurance Corporation (“FDIC”) insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 4 - Cash Deposits and Investments (continued) Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2025, GOCO had cash invested with the State Treasurer of $88,956,189 which represented approximately 0.56 percent of the total $15,918.0 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2025, the Pool’s resources included $39.1 million of cash on hand and $15,879.2 million of investments. As of June 30, 2024, GOCO had cash invested with the State Treasurer of $102,616,426 which represented approximately 0.52 percent of the total $18,095.0 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2024, the Pool’s resources included $38.5 million of cash on hand and $18,056.6 million of investments. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pools, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the State’s Annual Comprehensive Financial Report for the year ended June 30, 2025. Summary Total cash deposits and investments are as follows: 2025 Cash deposits $ Investments $ - 28 - June 30, 635,686 $ 2024 296,720 83,557,608 102,616,426 84,193,294 $ 102,913,146 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 4 - Cash Deposits and Investments (continued) Investment Earnings Investment earnings are composed of the following: June 30, Investment income Adjustment for unrealized gain (loss) on investments held by the State $ 2025 2,837,237 $ 2,298,689 $ 5,135,926 2024 3,255,834 (981,289) $ 2,274,545 Note 5 - Lottery Proceeds Receivable As of June 30, 2025, and 2024, GOCO had distributions owed from the Lottery amounting to $20,264,059 and $3,183,797, respectively. As of June 30, 2025, this represents GOCO’s allocation of net proceeds from the Lottery for April through June 2025 as Lottery proceeds did not reach GOCO’s constitutional cap (Note 2) for the year. For the receivable as of June 30, 2024, this represents GOCO’s allocation of net proceeds from the Lottery for April 2024 when Lottery proceeds reached GOCO’s constitutional cap (Note 2) for the year. Lottery proceeds are paid quarterly therefore earnings for April through June are typically received after the end of the fiscal year. These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On October 31, 2023, GOCO entered into a zero-interest promissory note with The Nature Conservancy, (“TNC”) in the amount of $2,090,740 for the acquisition of a land parcel to place a conservation easement on the property and eventually convey the property to a conservation buyer in support of sustainable agriculture. Per the loan agreement, the loan is due on October 31, 2025 and is interest-free through October 31, 2025, after which time the interest rate will equal the Prime Rate published in the Money Rates section of the Wall Street Journal. During Fiscal Year 2025, TNC has made payments in this note in the amount of $1,475,000, leaving an outstanding balance of $615,740. This loan was paid in full on July 1, 2025. On July 15, 2024, GOCO entered into a zero-interest promissory note with The Conservation Fund (“TCF”) in the amount of $6,500,000 for the purchase of property which will protect and connect land, water, and wildlife within the Dominguez-Escalante National Conservation Area in Delta, Mesa, and Montrose Counties in Colorado. The property will ultimately be conveyed to the Federal Bureau of Land Management to consolidate the property within the surrounding public land. Per the loan agreement, the loan is due on July 15, 2026 and is interest-free through July 15, 2026, after which time the interest rate will equal the Prime Rate published in the Money Rates section of the Wall Street Journal. No payments have been received as of June 30, 2025. - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 6 - Note Receivable and Advanced Grant Payments (continued) On September 25, 2024, GOCO entered into a zero-interest promissory note with Pitkin County in the amount of $10,000,000 for a term of up to three years for Pitkin County to purchase property which will protect and connect land, water, and wildlife adjacent to the Maroon Bells-Snowmass Wilderness Area. Per the loan agreement, this loan will be due and payable on July 24, 2025, however the loan is subject to annual extension through July 24, 2027. The property will ultimately be conveyed to the United States Forest Service in order to consolidate the property within the surrounding public land. No payments have been received as of June 30, 2025. During Fiscal Years 2025 and 2024, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered an eligibility requirement under GASB 33 - Accounting and Financial Reporting for Nonexchange Transactions, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds are expensed by GOCO based on the annual expense report documentation provided by the grantees. The Advanced Grant Payment balance on the Statement of Net Position is $3,863,473 at June 30, 2025 and $5,509,507 at June 30, 2024. Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2025 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization for: Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2024 $ 62,533 26,014 41,811 32,416 22,164 602,037 147,224 23,824 958,023 $ 87,886 17,158 105,044 Retirements $ (68,703) (13,006) (81,709) Balance June 30, 2025 $ 62,533 26,014 41,811 32,416 22,164 602,037 166,407 27,976 981,358 (49,022) (26,014) (31,014) (22,164) (267,421) (103,510) (16,612) (5,242) (4,042) (118,100) (53,258) (9,326) 68,703 13,006 (54,264) (26,014) (35,056) (22,164) (385,521) (88,065) (12,932) (515,757) 442,266 (189,968) (84,924) 81,709 - (624,016) 357,342 - 30 - $ $ Additions $ $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 7 - Capital Assets (continued) An analysis of the changes in capital assets for the year ended June 30, 2024 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization for: Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2023 $ 62,533 26,014 41,811 32,416 22,164 602,037 136,337 13,006 936,318 $ (43,779) (26,014) (26,971) (20,401) (149,321) (85,988) (8,671) $ (361,145) 575,173 $ 40,228 10,818 51,046 Retirements $ (29,341) (29,341) Balance June 30, 2024 $ 62,533 26,014 41,811 32,416 22,164 602,037 147,224 23,824 958,023 (5,243) (4,043) (1,763) (118,100) (46,863) (7,941) 29,341 - (49,022) (26,014) (31,014) (22,164) (267,421) (103,510) (16,612) Additions (183,953) (132,907) $ 29,341 - $ (515,757) 442,266 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2025 and 2024. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2024 $ 416,055,737 Transfers/ Additions $ 12,602,583 Transfers/ Deletions $ (304,966) Cumulative Authorized Grants at June 30, 2025 $ 428,353,354 410,999,497 16,283,849 (86,232) 427,197,114 405,250,532 19,080,752 (1,146,157) 423,185,127 431,418,124 13,494,172 (265,883) 444,646,413 $ 1,663,723,890 $ 61,461,356 $ (1,803,238) $ 1,723,382,008 - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 8 - Authorized Grants and Expended Grants (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2023 $ 379,720,412 Transfers/ Additions $ 37,387,052 Transfers/ Deletions $ (1,051,727) Cumulative Authorized Grants at June 30, 2024 $ 416,055,737 381,749,671 29,662,564 (412,738) 410,999,497 377,801,179 28,063,643 (614,290) 405,250,532 394,666,171 $1,533,937,433 36,675,877 $ 131,789,136 76,076 $ (2,002,679) 431,418,124 $1,663,723,890 Cumulative Expended Grants at June 30, 2024 $ 368,350,760 Transfers/ Additions $ 17,183,954 Cumulative Expended Grants at June 30, 2025 $ 385,534,714 365,394,245 23,345,335 388,739,580 373,305,518 14,849,048 388,154,566 372,534,660 17,227,171 389,761,831 $ 1,479,585,183 $ 72,605,508 $ 1,552,190,691 Cumulative Expended Grants at June 30, 2023 $ 355,490,792 Transfers/ Additions $ 12,859,968 Cumulative Expended Grants at June 30, 2024 $ 368,350,760 347,816,258 17,577,987 365,394,245 360,424,318 12,881,200 373,305,518 362,450,106 10,084,554 372,534,660 53,403,709 $ 1,479,585,183 $ 1,426,181,474 - 32 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 9 – Long-term Liabilities A summary of the changes in Long-term liabilities for the year ended June 30, 2025 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Compensated Absences* Balance June 30, 2024 $ 437,923 Additions $ 87,886 7,252 174,008 17,158 103,645 $ 619,183 $ 208,689 Retirements $ 186,937 Balance June 30, 2025 $ 338,872 Amounts due within one year $ 185,990 8,948 - 15,462 277,653 9,292 111,061 $ 195,885 $ 631,987 $ 306,343 *The schedule only reports the net change in the compensated absences liability A summary of the changes in Long-term liabilities for the year ended June 30, 2024 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Compensated Absences* Balance June 30, 2023 $ 569,898 Additions $ 40,228 4,333 155,725 10,818 18,283 $ 729,956 $ 69,329 Retirements $ 172,203 Balance June 30, 2024 $ 437,923 Amounts due within one year $ 156,826 7,899 - 7,252 174,008 3,504 69,603 $ 180,102 $ 619,183 $ 229,933 *This schedule only reports the net change in the compensated absences liability Leases GOCO has entered into agreements to lease its facilities, copy machines, vehicles, and a postage meter. These lease agreements qualify as long-term leases under GASB 87, Leases. On October 23, 2024, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the Southeast Region. The lease calls for total annual payments of $7,528 for three years beginning on November 1, 2024. The lease liability was measured using a discount rate of 2.80%, which is the 3-year Incremental Borrowing Rate as of October 31, 2024. As a result of the lease, GOCO recorded a lease liability with a value of $21,972. As of June 30, 2025, the unamortized balance of this lease liability was $14,444. - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 9 – Long-term Liabilities (continued) On October 23, 2024, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the North Central Region. The lease calls for total annual payments of $7,528 for three years beginning on November 1, 2024. The lease liability was measured using a discount rate of 2.80%, which is the 3-year Incremental Borrowing Rate as of October 31, 2024. As a result of the lease, GOCO recorded a lease liability with a value of $21,972. As of June 30, 2025, the unamortized balance of this lease liability was $14,444. On October 23, 2024, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the West Region. The lease calls for total annual payments of $7,528 for three years beginning on November 1, 2024. The lease liability was measured using a discount rate of 2.80%, which is the 3year Incremental Borrowing Rate as of October 31, 2024. As a result of the lease, GOCO recorded a lease liability with a value of $21,972. As of June 30, 2025, the unamortized balance of this lease liability was $14,444. On October 23, 2024, GOCO entered into a lease agreement for a vehicle for use by Denver office staff. The lease calls for total annual payments of $7,528 for three years beginning on November 1, 2024. The lease liability was measured using a discount rate of 2.80%, which is the 3-year Incremental Borrowing Rate as of October 31, 2024. As a result of the lease, GOCO recorded a lease liability with a value of $21,972. As of June 30, 2025, the unamortized balance of this lease liability was $14,444. On August 1, 2022, GOCO entered into a lease agreement for a vehicle for use by the regional program officers in the Northern Front Range Region. The lease calls for total annual payments of $6,477 for three years beginning on August 1, 2022. The lease liability was measured using a discount rate of 2.41%, which is the 3-year Incremental Borrowing Rate as of August 31, 2022. As a result of the lease, GOCO recorded a lease liability with a value of $18,975. As of June 30, 2025 and 2024, the unamortized balance of this lease liability was $0 and $6,322, respectively. On September 1, 2023, GOCO entered into a lease agreement for a vehicle for use by Denver office staff. The lease calls for total annual payments of $6,436 for three years beginning on September 1, 2023. The lease liability was measured at a discount rate of 3.68%, which is the 3-year Incremental Borrowing Rate as of September 30, 2023. As a result of this lease, GOCO recorded a lease liability with a value of $18,629. As of June 30, 2025 and 2024, the unamortized balance of this lease liability was $6,204 and $12,192, respectively. On October 18, 2023, GOCO entered into a lease agreement for a vehicle by the regional program officer in the Southwest Region. The lease calls for total annual payments of $7,464 for three years beginning on November 1, 2023. The lease liability was measured at a discount rate of 3.70%, which is the 3-year Incremental Borrowing Rate as of October 31, 2023. As a result of this lease, GOCO recorded a lease liability with a value of $21,599. As of June 30, 2025 and 2024, the unamortized balance of this lease liability was $7,195 and $14,136, respectively. - 34 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 9 – Long-term Liabilities (continued) GOCO has a lease for a postage meter for use in the Denver office. The postage meter lease calls for quarterly lease payments of $486 through July 2021 and $522 beginning October 2021 through October 2026. The lease liability for the postage meter was measured using the discount rate of 3%. For the year ended June 30, 2022, GOCO recorded a lease liability with a value of $10,107. As of June 30, 2025 and 2024, the unamortized balance of this lease liability was $3,051 and $5,011, respectively. In September 2022, GOCO entered into a new lease for its copier machine which calls for monthly lease payments of $205 from January 2023 through January 2027. The lease liability for the new lease was measured using a discount rate of 3.27% which is the 4-year Incremental Borrowing Rate as of September 30, 2023. For the years ended June 30, 2023, GOCO recorded a lease liability with a value of $9,211. As of June 30, 2025 and 2024, the unamortized balance of the copier lease liability was $3,657 and $5,970, respectively. In September 2016, GOCO entered into a lease agreement for the Denver office space which included monthly lease payments from July 2020 to January 2024. In March 2022, GOCO signed an amendment to the September 2016 lease agreement which extended the existing lease to April 2027 and included an abatement of three months from April 2022 through June 2022. The monthly lease payments from July 2022 to April 2027 range from $10,736 to $12,452. The lease liability was measured using a discount rate of 2.14% which is the 5-year, 1-month Treasury SLGS rate as of March 17, 2022. As a result of this lease amendment, GOCO retired the original lease liability with a value of $333,350 and recorded a new lease liability with a value of $634,835. As of June 30, 2025 and 2024, the unamortized balance of this lease liability was $260,989 and $394,292, respectively. Subscriptions In March 2025, GOCO entered into a SBITA for accounting software. The subscription calls for variable annual payments ranging from $5,444 to $6,170 for three years beginning on March 26, 2025. The subscription liability was measured using a discount rate of 2.87%, which is equal to the 3-year Incremental Borrowing Rate as of March 31, 2025. As a result of the lease, GOCO recorded a subscription liability with a value of $17,158. As of June 30, 2025, the unamortized balance of this subscription liability was $11,714. In November 2023, GOCO entered into a SBITA for reporting software. The subscription calls for variable annual payments ranging from $3,566 to $3,857 for three years beginning on December 1, 2023. The subscription liability was measured using a discount rate of 2.81%, which is equal to the 3-year Incremental Borrowing Rate as of November 30, 2023. As a result of the lease, GOCO recorded a subscription liability with a value of $10,818. As of June 30, 2025 and 2024, the unamortized balance of this subscription liability was $3,748 and $7,252, respectively. - 35 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 9 – Long-term Liabilities (continued) The future minimum lease obligations and the net present value of the minimum lease and subscription payments as of June 30, 2025, are as follows: Year ending June 30 2026 2027 Principal $ 195,282 159,052 Interest $ 6,937 2,220 Total $ 202,219 161,272 $ 354,334 $ $ 363,491 9,157 The future minimum lease obligations and the net present value of the minimum lease and subscription payments as of June 30, 2024, are as follows: Year ending June 30 2025 2026 2027 Principal $ 160,330 161,243 123,602 Interest $ 8,748 4,985 1,221 Total $ 169,078 166,228 124,823 $ 445,175 $ $ 460,129 14,954 Note 10 – Commitments and Contingencies Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2026. In Fiscal Year 2025 and 2024, GOCO's expenses on the marketing campaign were approximately $2.0 million each year. The GOCO Board has approved a Fiscal Year 2026 budget of $2.3 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 11 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan, administered by Unified Trust Company, which consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. - 36 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 11 - Pension Plans (continued) Benefit terms, including contribution requirements, for GOCO’s retirement plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2025 and 2024, respectively, GOCO recognized pension expense of $8,732 and $13,997, net of forfeitures, which reduced pension expense by $5,876 and $0. GOCO contributed $218,083 and $208,891 to the Pension Plan for the Fiscal Years ended June 30, 2025 and 2024, respectively, which approximates the required contribution. As of June 30, 2025 and 2024, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 12 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 19 members, 16 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. - 37 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2025 and 2024 Note 12 - Related Parties - State Agencies (continued) Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources, and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are included in the amounts listed in Note 8. Note 13 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 14 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 15 – Project Reimbursements During Fiscal Year 2024, GOCO received a cash payment from a grantee for a payment of cash in lieu of condemnation by a public utility of properties that GOCO funded in Adams County. During Fiscal Year 2024, portions of this property were purchased in lieu of condemnation from the grantee and per the grant agreements, funds in the amount of $85,066 were reimbursed to GOCO. - 38 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2025 Variance– Favorable (Unfavorable) Original Budget Final Budget Actual $ 84,315,350 $ 84,315,350 $ 84,904,766 2,450,000 2,450,000 5,138,991 2,688,991 86,765,350 86,765,350 90,043,757 3,278,407 65,506,550 3,091,788 1,304,764 2,000,000 97,000 65,506,550 3,091,788 1,304,764 2,283,756 97,000 72,605,510 2,587,357 1,167,689 2,283,723 105,044 (7,098,960) 504,431 137,075 33 (8,044) 72,000,102 72,283,858 78,749,323 (6,465,465) Excess (deficiency) of revenues over expenditures 14,765,248 14,481,492 11,294,434 (3,187,058) Other financing sources - leases and subscriptions 92,000 92,000 105,044 13,044 Net change in fund balance 14,857,248 14,573,492 11,399,478 (3,174,014) Fund balance – beginning of year 104,367,271 104,367,271 104,367,271 Fund balance – end of year $119,224,519 $118,940,763 $115,766,749 Revenues State lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures - 40 - $ 589,416 $ (3,174,014) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2024 Original and Final Budget Revenues State lottery proceeds Investment earnings and miscellaneous income Project reimbursements $ 80,136,172 1,500,000 - Total revenues Actual $ 81,771,604 2,283,707 85,066 Variance– Favorable (Unfavorable) $ 1,635,432 783,707 85,066 81,636,172 84,140,377 2,504,205 66,209,400 2,827,097 1,055,255 1,999,996 56,500 53,403,709 2,655,935 1,013,331 1,992,612 51,046 12,805,691 171,162 41,924 7,384 5,454 72,148,248 59,116,633 13,031,615 9,487,924 25,023,744 15,535,820 25,000 51,046 26,046 Net change in fund balance 9,512,924 25,074,790 15,561,866 Fund balance – beginning of year 79,292,481 79,292,481 - $ 88,805,405 $ 104,367,271 $ 15,561,866 Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess of revenues over expenditures Other financing sources - leases and subscriptions Fund balance – end of year - 41 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures for the year ended June 30, 2025. GOCO’s general fund did not exceed budgeted amounts for the year ended June 30, 2024. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 42 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities and the major fund information of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the GOCO’s basic financial statements and have issued our report thereon dated September 25, 2025. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of the GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the GOCO’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. eidebailly.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE 43 �Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the GOCO's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the GOCO’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the GOCO’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denver, Colorado September 25, 2025 44 �September 25, 2025 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2025, and have issued our report thereon dated September 25, 2025. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated June 23, 2025, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s system of internal control over financial reporting. Accordingly, as part of our audit, we considered the system of internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. We have provided our comments regarding internal controls during our audit in our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards dated September 25, 2025. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. eidebailly.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE 45 �Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. As discussed in Note 2 to the financial statements, GOCO has changed accounting policies related to accounting for compensated absences to adopt the provisions of Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. Accordingly, the accounting change has been retrospectively applied to the financial statements beginning July 1, 2024. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Accounting Estimates and Related Disclosures Accounting estimates and related disclosures are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. No such sensitive accounting estimates were identified. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: the disclosure of Note Receivables and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, and Related Parties – State Agencies in Note 12. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. There were no uncorrected or corrected misstatements identified as a result of our audit procedures. 46 �Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. As described in Note 2 to the financial statements, GOCO adopted GASB Statement No. 101, Compensated Absences. The purpose of the paragraph is to draw attention to the disclosures for the adoption of the standards update. We have included an emphasis of matter in our report regarding this adoption. We did not modify our opinion related to this matter. Representations Requested from Management We have requested certain written representations from management which are included in the management representation letter dated September 25, 2025. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. This report is intended solely for the information and use of the GOCO Board, Management of GOCO, the Legislative Audit Committee, and Office of the State Auditor, and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee, this report is a public document. Denver, Colorado 47 � https://cpw.cvlcollections.org/files/original/e8d935b963808894c8d8ad5ac7d2c4e3.pdf 10bce2b6fe4f2aa550ac285bccfb91eb PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2024 and 2023 �LEGISLATIVE AUDIT COMMITTEE Representative Lisa Frizell Chair Representative Andrew Boesenecker Vice Chair Representative Gabe Evans Senator Dafna Michaelson Jenet Senator Julie Gonzales Senator Rod Pelton Representative William Lindstedt Senator Kevin Van Winkle OFFICE OF THE STATE AUDITOR Kerri L. Hunter, CPA, CFE State Auditor Marisa Edwards, CPA Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly LLP Contractor REPORT NUMBER 2422F �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2024 MEMBERS Pamela Denahy – Chair Leticia Martinez Charles Garcia John Montepare Mo Siegel Craig Hughes Brenda May Mina Liebert Krithika Prashant Patty Imhoff Tom Lee Carrie Curtiss Jahi Simbai Mara Brosy-Wiwchar Ray Tschillard Dan Gibbs Jay Tutchton Marie Haskett Vacant �November 7, 2024 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2024 and 2023. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 6 Independent Auditor’s Report ................................................................................................................ 10 Management’s Discussion and Analysis ................................................................................................ 13 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2024 ................. 21 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2023 ................. 22 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2024 ............................... 23 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2023 ............................... 24 Notes to Financial Statements .................................................................................................... 25 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2024 ..................................... 45 Budgetary Comparison Schedule – For the Year Ended June 30, 2023 ..................................... 46 Notes to the Required Supplementary Information .................................................................... 47 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 48 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 50 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2024 and 2023 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2024 and 2023. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from June 2024 through October 2024. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2024; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated November 7, 2024, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2024 and 2023, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated November 7, 2024, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There was one finding and recommendation that related to internal control over financial reporting for the year ended June 30, 2024. There were no findings or recommendations reported for the year ended June 30, 2023. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Year Ended June 30, 2024 Recommendation Number 2024-001 Page Number Recommendation Summary Response 6 The Great Outdoors Colorado (GOCO) Agree should strengthen its internal controls over financial reporting to ensure grant expenditure accounting transactions are correctly recorded and reported in accordance with GOCO’s Grant Expenditure Recognition Policy. -2- Implementation Date June 2025 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2024 and 2023 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2024 was the thirty-first year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2024, the State Board that oversees GOCO consists of a total of nineteen members: two members of the public from each of the eight congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2024, GOCO had a permanent staff of 23 and received $81.8 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2024. During Fiscal Year 2023, GOCO had a permanent staff of 23 and received $75.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2023. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2024 and 2023 As shown in the tables below and on the following page, GOCO complied with the above policy on authorized and expended grants as of Fiscal Year 2024. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2025). GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. In order to comply with policy, the Board passed a resolution on June 14, 2018, to bring local government authorizations back within substantially equal tolerance on authorizations no later than Fiscal Year 2023. This includes reducing local government spending in the Local Government Purpose in GOCO’s 2021 – 2025 spending plan. As of the end of Fiscal Year 2024, cumulative local government authorizations were within the equal tolerance policy. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represent the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2024 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total % Grants Expended Amount % Cumulative Difference $ 416,056 25.0% $ 368,351 24.9% 410,999 24.7 365,394 24.7 45,605 405,251 24.4 373,306 25.2 31,945 431,418 25.9 372,535 25.2 58,883 $ 1,663,724 100.0% $1,479,586 100.0% Source: Data provided by GOCO -4- 47,705 $ 184,138 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2024 and 2023 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2024 FiveYear Change Funding Purpose 2020 Grants Authorized % 2021 2022 2023 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.6% 24.7% 24.6% 24.8% 25.0% 0.4% 24.5 24.7 24.8 24.9 24.7 0.2% 24.3 24.3 24.6 24.6 24.4 0.1% 26.6 26.3 26.0 25.7 25.9 (0.7%) 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years FiveYear Change Funding Purpose 2020 Grants Expended % 2021 2022 2023 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.6% 24.8% 24.9% 24.9% 24.9% 0.3% 23.8 24.0 24.2 24.4 24.7 0.9% 25.3 25.1 24.9 25.3 25.2 (0.1)% 26.3 26.1 26.0 25.4 25.2 (1.1)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- 2024 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations For the Year Ended June 30, 2024 Finding 2024-001 Internal Controls over Financial Reporting The Great Outdoors Colorado (GOCO) is responsible for distributing net proceeds from state-supervised Lottery games to provide funding, in the form of investments and grants, for wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. Colorado municipalities, counties, Title 32 special districts with parks and recreation authority, as well as nonprofit conservation organizations, political subdivisions of the state, and Colorado Parks and Wildlife (CPW) are eligible to apply for GOCO grants. Not all GOCO programs are alike; therefore, GOCO has determined specific eligibility requirements based on the type of grant. GOCO has two primary grant types: 1) Competitive, application-based, grants and 2) other grant expenditures which include CPW annual investment proposal and land acquisition grants, and competitive land acquisition grants. GOCO’s grants staff are required to complete a Due Diligence Checklist for all land acquisition grants. In addition, GOCO and CPW have a memorandum of understanding that specifies that CPW projects involving acquisition of any real property interest will be subject to a mutually agreed upon due diligence process as set forth in GOCO’s Due Diligence Checklist. Once GOCO’s grants staff complete the Due Diligence Checklist, then GOCO will issue the payment for the land acquisition grants and recognize the expense. GOCO accounting staff are responsible for its financial accounting and reporting, which includes the accurate and timely entry of financial transactions into its financial accounting system, Financial Edge. Throughout the year, GOCO’s grants staff receive a reporting packet from the grantee. The grants staff review the reporting packet, and if applicable, the due diligence checklist, and upon satisfactory completion, will approve the grant expenditure and payment. For year-end reporting, GOCO’S accounting staff work with the grants staff to determine grant expense and the corresponding grants payable liability. GOCO is required to prepare its financial statements in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) establishes GAAP for state and local government entities through the issuance of GASB statements, which GOCO must comply with when preparing its financial statements. GASB establishes the criteria for recognizing grant expenditures based on the type of nonexchange transaction. Since GOCO’s grants are the result of contractual agreements that are entered into willingly by the parties to the agreements, the grants meet the definition of a voluntary nonexchange transaction, as defined by the Governmental Accounting Standards Board (GASB). Additionally, GOCO is required to follow its Grant Expenditure Recognition Policy, which has been derived from GAAP and was implemented in Fiscal Year 2024. For the year ended June 30, 2024, GOCO recognized approximately $53.4 million in grants expenditures/expenses; of this amount, about $6.3 million was for land acquisitions. 6 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations For the Year Ended June 30, 2024 What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether GOCO properly reported its grant expenditures for Fiscal Year 2024 in compliance with applicable accounting principles and standards and GOCO’s policies. We obtained an understanding of GOCO’s internal controls over account balances, financial processes, and fiscal year-end close processes. We specifically performed the following: ● Obtained and analyzed GOCO’s Financial Edge transactional data related to grant expenditures. ● Inquired of GOCO personnel and obtained GOCO’s Grant Expenditure Recognition Policy to gain an understanding of the process for grant expenditure recognition. How were the results of the audit work measured? We measured the results of our audit against the following: ● GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions (GASB 33), paragraph 21, establishes guidance for recognition requirements for voluntary nonexchange transactions. Those recognition criteria state that providers of resources should recognize liabilities and expenses (expenditures) from voluntary nonexchange transactions when all applicable eligibility requirements are met. Paragraph 20 further goes on to state that contingencies are an eligibility criterion. Contingencies exist when the provider’s offer of resources is contingent upon specified actions. ● GOCO’s Grant Expenditure Recognition Policy requires completion of a Due Diligence Checklist by GOCO’s grants staff for grant agreements involving a real property acquisition (land acquisition grants). The Policy requires that GOCO will remit payment only after completion of a due diligence materials review by GOCO’s grant staff. The Policy also requires that a grant expense and corresponding liability will only be recognized for land acquisition grants completed in the fiscal year if the Due Diligence Checklist review has been completed prior to the end of the fiscal year. What problem did the audit work identify? Our audit identified that GOCO overstated a CPW land acquisition grant expenditure in Financial Edge by $6,250,000 in Fiscal Year 2024. Through our testing of grant expenditures (expenses) and grants payable, we discussed with GOCO staff how they followed their Grant Expenditure Recognition Policy. After we brought the recognition criteria to GOCO’s attention, management re-assessed the recognition criteria of grant expenditure transactions during the current year under audit. This resulted in GOCO identifying a land acquisition grant expenditure in the amount of $6,250,000 that was incorrectly recognized as a grant expenditure and related accounts payable as of and for the year ended June 30, 2024. Based on GOCO’s Grant Expenditure Recognition Policy, all recognition criteria were not considered met until July 2024 once the Due Diligence Checklist was completed. 7 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations For the Year Ended June 30, 2024 After our discussion with GOCO to determine the proper accounting treatment for this transaction, GOCO staff made an adjustment to the accounting records and the financial statements to remove the grant payable as of June 30, 2024, and grant expenditure (expense) for the year end June 30, 2024. Why did this problem occur? We determined that GOCO did not consider their Grant Expenditure Recognition Policy regarding whether the requirements for completion of the Due Diligence Checklist was met to support recognition of any land acquisition grant expenditures for the year ended June 30, 2024. GOCO did not have sufficient internal controls in place to ensure it properly recognized grant expenditures (expenses) in accordance with its documented policies. GOCO updated its Grant Expenditure Recognition Policy during Fiscal Year 2024, clarifying the contingency criteria related to land acquisition grants, as well as other grant eligibility criteria. GOCO staff indicated that they did not consider the contingency criteria as outlined in their Fiscal Year 2024 policy updates for their financial reporting. Why does this problem matter? Because GOCO staff did not properly apply their own written policies based on relevant accounting principles and guidance, liabilities and grant expenditures (expenses) that were recorded in GOCO’s financial statements were materially overstated by $6,250,000, or approximately 12 percent of overall expenditures (expenses). Additionally, without adequate internal controls in place over financial reporting to ensure that all grant transactions are recorded properly, GOCO cannot ensure the accuracy and completeness of its reported financial information. Classification of Finding: Material Weakness. This finding does not apply to a prior audit recommendation. Recommendation 2024-001 The Great Outdoors Colorado (GOCO) should strengthen its internal controls over financial reporting to ensure grant expenditure accounting transactions are correctly recorded and reported in accordance with GOCO’s Grant Expenditure Recognition Policy. 8 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations For the Year Ended June 30, 2024 Response Great Outdoors Colorado Agree Implementation Date: June 2025 We acknowledge that we overlooked the due diligence completion date as a criterion for accruing this expenditure for the year ending June 30, 2024. However, this expenditure did meet all other eligibility criteria in our Grant Expenditure Recognition policy, and we only chose to accrue this payment after confirming that the grant was included in the CPW billing packet for March 2024 and that the due diligence checklist was satisfactorily completed prior to payment in July 2024. To improve our processes, we implemented a tracking system using project management software in September 2024. This system will help us monitor important dates related to grant payments, including report submission dates, receipt dates, due diligence completion dates, and payment dates. Additionally, we will continue to collaborate with grant officers after year-end to ensure that accrued grant payments meet all of the eligibility criteria outlined in GOCO’s Grant Expenditure Recognition Policy. 9 �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities and the major fund of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2024 and 2023, and the related notes to the financial statements, which collectively comprise the GOCO’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of GOCO, as of June 30, 2024 and 2023, and the respective changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of GOCO and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE 10 �In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the GOCO’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. 11 �Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison schedules be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Members of the State Board of the Great Outdoors Colorado Trust Fund and the Description of the State Board of the Great Outdoors Colorado Trust Fund but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 7, 2024 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado November 7, 2024 12 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal Years Ended June 30, 2024 and 2023. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 21. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2024, Fiscal Year 2023, and Fiscal Year 2022. 2024 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2023 2022 2024/2023 $ Variance % 2023/2022 $ Variance % $81,771,604 $75,706,639 $ 73,117,767 $6,064,965 8.0% $2,588,872 3.5% $53,403,709 $72,545,099 $68,048,786 ($19,141,390) (26.4%) $4,496,313 6.6% 2024 GOCO received its maximum allowable Lottery proceeds for the year of approximately $81.8 million, per the constitutional cap. This represents a $6.1 million increase over Fiscal Year 2023 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures decreased by $19.1 million from Fiscal Year 2023. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The total Fiscal Year 2024 actual expenditures were below budgeted expenditures by $13.0 million due to expenditures for grants and personnel services and benefits both coming in below budget. Although we do our best to project grant expenditures for the year, it is important to note that GOCO does not have much control over the timing in which grants get paid out beyond the timeframe delineated in grant agreements. Personnel services and benefits are below budget expectations due to staff vacancies throughout the year. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 2023 GOCO received its maximum allowable Lottery proceeds for the year of approximately $75.7 million, per the constitutional cap. This represents a $2.6 million increase over Fiscal Year 2022 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $4.5 million from Fiscal Year 2022. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The total Fiscal Year 2023 actual expenditures exceeded budgeted expenditures by $10.7 million due to grant expenditures exceeding budget expectations. Although we do our best to project grant expenditures for the year, it is important to note that GOCO does not have much control over the timing in which grants get paid out beyond the timeframe delineated in grant agreements. Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($81.8 million and $75.7 million in Fiscal Year 2024 and Fiscal Year 2023, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund, the Outdoor Equity Fund, the Wildlife Cash Fund, and the Parks and Outdoor Rec Fund for Fiscal Year 2024 and Fiscal Year 2023. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2024, 2023, and 2022. 2024 $ 113,807,810 442,266 114,250,076 June 30, 2023 $ 93,459,091 575,173 94,034,264 Other liabilities Long-term leases and subscriptions Total liabilities 9,440,539 445,175 9,885,714 14,166,610 574,231 14,740,841 12,209,691 708,225 12,917,916 Net investment in capital assets Unrestricted Total net position (2,909) 104,367,271 104,364,362 942 79,292,481 79,293,423 40,598 78,091,968 78,132,566 Current and other assets Capital assets, net Total assets $ $ $ $ 2022 90,301,659 748,823 91,050,482 2024 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable, and advanced grants payments. Cash increased by approximately $13.4 million during Fiscal Year 2024 due to an increase in Lottery proceeds and a decrease in grant payments made during the year. The Lottery proceeds receivable increased by approximately $3.2 million from June 30, 2023. Notes receivable increased by $2.0 million from a note issued in October 2023. There were no notes outstanding at the end of Fiscal Year 2023. The constitutional cap was met later in the year therefore the balance of proceeds, which are distributed quarterly, will be received after the end of the fiscal year. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, Restoration and Stewardship of Outdoor Resources and Environment (“RESTORE”), and Stewardship Impact programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2024, other liabilities decreased by approximately $4.7 million from June 30, 2023. The liabilities outstanding at the end of Fiscal Year 2024 consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated March through June 2024 investments of approximately $7.7 million, a decrease of approximately $4.4 million from the prior year. Compensated absences increased slightly due to an increase in staff accruing vacation during the year. - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 The capital assets and long-term liabilities reported for Fiscal Year 2024 decreased by $132,907 and $129,056, respectively. The decreases are due to the annual amortization of the lease and subscription assets and liabilities due to the implementation of GASB 87, Leases, and GASB 96, Subscription-Based Information Technology Arrangements (“SBITA”), which requires governments to recognize an asset and liability for right-to-use assets under long-term lease and subscription agreements. The asset and related liability are amortized over the life of the lease or subscription. 2023 The significant portions of current and other assets are cash and advanced grants payments. Cash increased by approximately $9.0 million during Fiscal Year 2023 due to a decrease in Lottery proceeds and notes receivable, increase in grants payable, and a large project reimbursement at year end. The Lottery proceeds receivable decreased by approximately $4.5 million from June 30, 2022. In Fiscal Year 2023, the constitutional cap was met in March and all proceeds were received prior to the end of the fiscal year. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Stewardship Impact programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2023, liabilities increased by approximately $1.8 million from June 30, 2022. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by CPW. Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2023 investments of approximately $12.1 million, an increase of approximately $3.0 million from the prior year. Compensated absences increased slightly due to an increase in staff accruing vacation during the year. The capital assets and long-term liabilities reported for Fiscal Year 2023 decreased by $173,650 and $133,994, respectively. The decreases are due to the annual amortization of the lease and subscription assets and liability added with the implementation of GASB 87, Leases, and GASB 96, SubscriptionBased Information Technology Arrangements (“SBITA”), which requires governments to recognize an asset and liability for right-to-use assets under long-term lease and subscription agreements. The asset and related liability are amortized over the life of the lease or subscription. - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2024, 2023 and 2022. Fiscal Years Ended June 30, 2024 2023 2022 $ 81,771,604 $ 75,706,639 $ 73,117,767 2,274,545 9,162 85,066 84,140,377 (151,650) 2,851 3,667,701 79,225,541 (3,934,020) 1,120 69,184,867 Program expenses Grants expended Personnel services and benefits Operating Total expenses 53,403,709 2,655,935 3,009,794 59,069,438 72,545,099 2,548,490 2,971,095 78,064,684 68,048,786 2,231,697 3,068,202 73,348,685 Change in net position Beginning net position 25,070,939 79,293,423 1,160,857 78,132,566 (4,163,818) 82,296,384 Ending net position $ 104,364,362 $ 79,293,423 $ 78,132,566 Program revenues Lottery revenue General revenues Investment earnings (loss) Miscellaneous income Project reimbursements Total revenue 2024 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2024 were $2.3 million and the Fiscal Year 2023 net loss was $151,650, resulting in an increase in investment earnings of $2.4 million. During the year, GOCO received $85,066 in project reimbursements from a grantee for the payment of cash in lieu of condemnation by a public utility of conserved properties previously funded by GOCO, as stipulated in the grantee’s grant agreements from prior years. Grant expenditures in Fiscal Year 2024 decreased by $19.1 million from Fiscal Year 2023. This decrease is primarily due to the timing of project completions and grantee reporting during the year. GOCO anticipates that grant expenditures will start to increase in Fiscal Years 2025 – 2027, as the majority of the large Centennial Program grants were awarded in March 2024. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2023 due to anticipated increases in staffing as well as an increase in travel and meeting expenditures as we continue to implement the regional program model. - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 2023 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2023 was a net loss of $151,650 and the Fiscal Year 2022 net loss was $3.9 million, resulting in an increase in investment earnings of $3.8 million. During the year, GOCO received $3.7 million in project reimbursements from the proceeds of land sales from a grantee, as stipulated in their grant agreements from prior years. Grant expenditures in Fiscal Year 2023 increased by $4.5 million from Fiscal Year 2022. GOCO anticipated that grant expenditures would start to increase as the current spending plan was designed to backload larger grant awards in the last few years of the plan. As we begin to award the larger Centennial Program grants in Fiscal Years 2024 – 2025, grant expenditures are expected to continue to increase. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2022 due to anticipated increases in staffing as well as an increase in travel and meeting expenditures as we continue to implement the regional program model. Capital Assets and Debt Administration Capital Assets (See Note 7) The following table reflects capital assets at year-end net of depreciation and amortization as of June 30, 2024, 2023 and 2022. Furniture and equipment Leasehold improvements Intangible assets Leased assets Subscription assets Total, net capital assets $ 2024 24,308 32,416 378,330 7,212 $ 442,266 $ $ 2023 33,594 1,763 32,416 503,065 4,335 575,173 $ $ 2022 36,741 4,786 32,416 666,209 8,671 748,823 2024 GOCO reported net capital assets of $442,266 for Fiscal Year 2024. This amount represents a net decrease of $132,907 from Fiscal Year 2023. The most significant reason for this decrease was due to the depreciation of subscription and leased assets added in the implementation of GASB 96, SBITAs and GASB 87, Leases. The balance of the leased and subscription assets was $378,330 and $7,212, respectively, net of accumulated amortization for Fiscal Year 2024. 2023 GOCO reported net capital assets of $575,173 for Fiscal Year 2023. This amount represents a net decrease of $173,650 from Fiscal Year 2022. The most significant reason for this decrease was due to the depreciation of subscription and leased assets added in the implementation of GASB 96, SBITAs and GASB 87, Leases. The balance of the leased and subscription assets was $503,065 and $4,335, respectively, net of accumulated amortization for Fiscal Year 2023. - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 Long-term Lease and Subscription Liabilities 2024 GOCO reported long-term leases and subscriptions of $445,175 for Fiscal Year 2024, a decrease of $129,056 over Fiscal Year 2023 (see Note 9). This decrease is primarily due to the amortization of the lease liabilities previously recorded through the implementation of GASB 87, Leases and GASB 96, SBITAs. 2023 GOCO reported long-term leases and subscriptions of $574,231 for Fiscal Year 2023, a decrease of $133,994 over Fiscal Year 2022 (see Note 9). This decrease is primarily due to the amortization of the lease liabilities previously recorded through the implementation of GASB 87, Leases and GASB 96, SBITAs. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $84.3 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2025. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to start increasing in the next two years as the larger Centennial program funds were awarded in March 2024. As GOCO enters the fifth and final year of its current 5-year spending plan, focus will continue to be on the Generation Wild, Youth Corps, and RESTORE programs as well as the Centennial, Community Impact, Land Acquisition, Planning and Capacity, and Stewardship Impact programs from GOCO’s new program portfolio established under the 2021 strategic plan. As noted above, the current 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2024 – 2025) in order to identify and prepare large impactful projects for the Centennial Program. The Centennial Program is GOCO’s strategic initiative aimed at encouraging multipurpose, transformational projects and, as noted above, most funds were awarded in Fiscal Year 2024. Priority will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (Article XXVII). Also, GOCO is budgeting $6.5 million for Fiscal Year 2025 operating expenditures. The increase from the prior year is primarily due to strategic planning for the next five years (Fiscal Years 2026 – 2030) and the continued rollout of the regional program model. Part of GOCO’s current strategic plan implementation included expanding program staff into different areas of Colorado to work collaboratively with grantees and partners, and the Fiscal Year 2025 budget includes the addition of one program officer position to work with the Generation Wild Coalitions across the state. The Fiscal Year 2025 budget also includes an increase in salaries for most full-time employees. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2024 and 2023 2025 budgeted operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay $ 3,091,788 1,256,364 2,000,000 145,400 Total 2025 Budgeted Operating Expenditures $ 6,493,552 - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2024 Adjustments (Note 3) Statement of Net Position $ - $102,913,146 3,183,797 2,090,740 91,226 19,394 5,509,507 442,266 442,266 442,266 $114,250,076 9,109,510 157,021 174,008 - 9,109,510 157,021 174,008 - 160,330 284,845 160,330 284,845 Total liabilities 9,440,539 445,175 9,885,714 Fund Balances/Net Position Fund balances Nonspendable Assigned 91,226 104,276,045 (91,226) (104,276,045) - Total fund balances 104,367,271 (104,367,271) - Total liabilities and fund balances $113,807,810 General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation and amortization Total assets $102,913,146 3,183,797 2,090,740 91,226 19,394 5,509,507 $113,807,810 Liabilities Grants payable Accounts payable Compensated absences payable Long-term leases and subscriptions Due within one year Due in more than one year $ Net Position Net investment in capital assets Unrestricted (2,909) 104,367,271 (2,909) 104,367,271 Total Net Position $104,364,362 $104,364,362 See Notes to the Financial Statements - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2023 Adjustments (Note 3) Statement of Net Position $ - $ 89,487,566 79,984 25,531 3,866,010 575,173 575,173 575,173 $ 94,034,264 13,859,083 151,802 155,725 - 13,859,083 151,802 155,725 - 162,636 411,595 162,636 411,595 Total liabilities 14,166,610 574,231 14,740,841 Fund Balances/Net Position Fund balances Nonspendable Assigned 79,984 79,212,497 (79,984) (79,212,497) - Total fund balances 79,292,481 (79,292,481) - Net Position Net investment in capital assets Unrestricted 942 79,292,481 942 79,292,481 Total Net Position $ 79,293,423 $ 79,293,423 General Fund Assets Cash and investments Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation and amortization Total assets $ 89,487,566 79,984 25,531 3,866,010 $ 93,459,091 Liabilities Grants payable Accounts payable Compensated absences payable Long-term leases and subscriptions Due within one year Due in more than one year Total liabilities and fund balances $ $ 93,459,091 See Notes to the Financial Statements - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2024 General Fund Adjustments (Note 3) Statement of Activities $ 3,851 (51,046) $ 53,403,709 2,655,935 3,009,794 - (47,195) 59,069,438 Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay $ 53,403,709 2,655,935 3,005,943 51,046 Total expenditures/expenses 59,116,633 Program revenues - State Lottery proceeds 81,771,604 - 81,771,604 22,654,971 47,195 22,702,166 9,162 2,274,545 85,066 - 9,162 2,274,545 85,066 2,368,773 - 2,368,773 25,023,744 47,195 25,070,939 51,046 (51,046) - 25,074,790 (25,074,790) - 25,070,939 25,070,939 942 79,293,423 (2,909) $104,364,362 Net program revenues (expenses) General Revenues Other income Investment earnings (loss) Project reimbursements Total General revenues (loss) Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Change in fund balance Change in net position Fund balance/net position - beginning of the year Fund balance/net position - end of the year 79,292,481 $104,367,271 See Notes to the Financial Statements - 23 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2023 General Fund Adjustments (Note 3) Statement of Activities $ 45,869 (34,399) $ 72,545,099 2,548,490 2,971,095 - Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay $ 72,545,099 2,548,490 2,925,226 34,399 Total expenditures/expenses 78,053,214 11,470 78,064,684 Program revenues - State Lottery proceeds 75,706,639 - 75,706,639 Net program revenues (expenses) (2,346,575) General Revenues Other income Investment earnings (loss) Project reimbursements Total General revenues (loss) Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Change in fund balance (11,470) 2,851 (151,650) 3,667,701 - 2,851 (151,650) 3,667,701 3,518,902 - 3,518,902 1,172,327 (11,470) 1,160,857 28,186 (28,186) - 1,200,513 (1,200,513) - 1,160,857 1,160,857 40,598 78,132,566 942 $ 79,293,423 Change in net position Fund balance/net position - beginning of the year, as restated Fund balance/net position - end of the year 78,091,968 $ 79,292,481 See Notes to the Financial Statements - 24 - (2,358,045) $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 2 - Summary of Significant Accounting Policies (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5–7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. GOCO has recorded lease and subscription assets also known as subscription-based information technology arrangements (“SBITAs”). The lease and subscription assets are initially measured at an amount equal to the initial measurement of the related lease and subscription liability plus any lease and subscription payments made prior to the lease term, less incentives, and plus any ancillary charges necessary to place the underlying asset into service. These assets are amortized on a straight-line basis over the life of the related lease or SBITA. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 2 - Summary of Significant Accounting Policies (continued) Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements as the following conditions of GASB 16, Accounting for Compensated Absences, have been met: 1. The employees' rights to receive compensation are attributable to services already rendered and; 2. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. GASB Interpretation No. 6 requires leave balances that will be liquidated with expendable available financial resources (current liabilities) be accrued and reported as a governmental fund liability and expenditure. GOCO budgeted for compensated absences in the current year with current financial resources. Therefore, the full liability was accrued and reported in the Government-wide and fund financial statements. Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. Prepaid items). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. The Board can modify or rescind a commitment of resources through passage of a new resolution. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance recorded in the General Fund on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2024 and 2023 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 2 - Summary of Significant Accounting Policies (continued) State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2024 and 2023 was approximately $81.8 million and $75.7 million, respectively, which was the maximum amount allowable under the State Constitution. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The adjustments pertain to capital assets and long-term debt as outlined below. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $442,266 and $575,173 adjustments to capital assets as of June 30, 2024 and 2023, respectively, represent the capital assets of GOCO, net of accumulated depreciation and amortization of leased and subscription assets. Certain liabilities, such as lease and subscription liabilities, are not due and payable in the current period and therefore are not reported in the balance sheet. The $445,175 and $574,231 adjustments to long-term lease and subscription liabilities as of June 30, 2024 and 2023, respectively, represent the long-term lease liability of GOCO, net of accumulated amortization. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. This adjustment pertains to capital assets and lease and subscription liabilities. - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. In addition, certain capital additions were financed through leases and Subscription-Based Information Technology Arrangements (“SBITA”). In governmental funds, a lease or SBITA is considered a source of financing, but in the statement of net position, the lease or SBITA is reported as a long-term liability. This adjustment represents the amount by which depreciation and amortization expense and loss on disposals of assets exceeded capital outlays and lease proceeds in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2024 2023 $ (11,048) $ (12,383) (172,905) (162,868) 1,820 180,102 127,562 (3,851) (45,869) 6,213 51,046 28,186 51,046 34,399 Depreciation expense Amortization of leased and subscription assets Gain/Loss on restructuring of leased asset/liability Reduction of long-term leases and subscription liabilities Increase in operating expenses Capital outlay Leased and subscription asset capital outlays Decrease in capital outlay expense New leases or subscriptions recorded Net adjustment to increase (decrease) net change in fund balance to arrive at change in net position Change in fund balance Change in net position $ (51,046) (28,186) (3,851) 25,074,790 (39,656) 1,200,513 25,070,939 $ 1,160,857 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. - 30 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 4 - Cash Deposits and Investments (continued) The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2024, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2024 Bank Balance $ 331,511 Carrying Balance $ 345 296,375 $ $ 331,511 296,720 As of June 30, 2023, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2023 Bank Balance $ 299,083 Carrying Balance $ 294 285,359 $ $ 299,083 285,653 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2024, GOCO had cash invested with the State Treasurer of $102,616,426 which represented approximately 0.52 percent of the total $18,095.0 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2024, the Pool’s resources included $38.5 million of cash on hand and $18,056.6 million of investments. As of June 30, 2023, GOCO had cash invested with the State Treasurer of $89,201,913 which represented approximately 0.47 percent of the total $18,810.90 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2023, the Pool’s resources included $35.0 million of cash on hand and $18,775.8 million of investments. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pools, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Annual Comprehensive Financial Report for the year ended June 30, 2024. Summary Total cash deposits and investments are as follows: Cash deposits Investments Investment Earnings June 30, 2024 $ 296,720 102,616,426 $ 2023 285,653 89,201,913 $ 102,913,146 $ 89,487,566 Investment earnings are composed of the following: Investment income Adjustment for unrealized gain (loss) on investments held by the State $ $ - 32 - June 30, 2024 3,255,834 $ 2023 2,267,683 (981,289) (2,419,333) 2,274,545 $ (151,650) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 5 - Lottery Proceeds Receivable As of June 30, 2024, and 2023, GOCO had distributions owed from the Lottery amounting to $3,183,797 and $0, respectively. As of June 30, 2024, this represents GOCO’s allocation of net proceeds from the Lottery for April 2024 when GOCO reached the constitutional cap (Note 2) for the year. For the receivable as of June 30, 2023, the receivable is $0 as GOCO reached the constitutional cap in March 2023 and all funds were received by Lottery prior to the end of the fiscal year. Lottery proceeds are paid quarterly therefore earnings for April through June are typically received after the end of the fiscal year. These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On October 31, 2023, GOCO entered into a zero-interest promissory note with The Nature Conservancy, (“TNC”) in the amount of $2,090,740 for the acquisition of a land parcel to place a conservation easement on the property and eventually convey the property to a conservation buyer in support of sustainable agriculture. Per the loan agreement, the loan is due on October 31, 2025 and is interest-free through October 31, 2025, after which time the interest rate will equal the Prime Rate published in the Money Rates section of the Wall Street Journal. During Fiscal Years 2024 and 2023, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered an eligibility requirement under GASB 33 - Accounting and Financial Reporting for Nonexchange Transactions, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds are expensed by GOCO based on the annual expense report documentation provided by the grantees. The Advanced Grant Payment balance on the Statement of Net Position is $5,509,507 at June 30, 2024 and $3,866,010 at June 30, 2023. - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2024 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2023 $ 62,533 26,014 41,811 32,416 22,164 602,037 136,337 13,006 936,318 $ (43,779) (26,014) (26,971) (20,401) (149,321) (85,988) (8,671) $ (361,145) 575,173 $ 40,228 10,818 51,046 Retirements $ (29,341) (29,341) Balance June 30, 2024 $ 62,533 26,014 41,811 32,416 22,164 602,037 147,224 23,824 958,023 (5,243) (4,043) (1,763) (118,100) (46,863) (7,941) 29,341 - (49,022) (26,014) (31,014) (22,164) (267,421) (103,510) (16,612) Additions (183,953) (132,907) $ 29,341 - $ (515,757) 442,266 An analysis of the changes in capital assets for the year ended June 30, 2023 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2022 $ 56,320 26,014 41,811 32,416 22,164 634,835 108,151 13,006 934,717 Additions $ 6,213 28,186 34,399 Retirements $ (32,798) (32,798) Balance June 30, 2023 $ 62,533 26,014 41,811 32,416 22,164 602,037 136,337 13,006 936,318 (38,461) (26,014) (22,929) (17,378) (31,221) (45,556) (4,335) (5,318) (4,042) (3,023) (118,100) (40,432) (4,336) - (43,779) (26,014) (26,971) (20,401) (149,321) (85,988) (8,671) $ (185,894) 748,823 - 34 - $ (175,251) (140,852) $ (32,798) $ (361,145) 575,173 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2024 and 2023. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2023 Transfers/ Additions $ 379,720,412 $ 37,387,052 381,749,671 29,662,564 (412,738) 410,999,497 377,801,179 28,063,643 (614,290) 405,250,532 394,666,171 36,675,877 76,076 431,418,124 $ 1,533,937,433 $ 131,789,136 $ (2,002,679) $ 1,663,723,890 $ Transfers/ Deletions Cumulative Authorized Grants at June 30, 2024 (1,051,727) $ 416,055,737 Cumulative Authorized Grants at June 30, 2022 $ 364,004,786 Transfers/ Additions $ 16,262,272 Transfers/ Deletions $ (546,646) Cumulative Authorized Grants at June 30, 2023 $ 379,720,412 366,784,045 16,131,965 (1,166,339) 381,749,671 364,117,975 14,070,212 (387,008) 377,801,179 383,942,185 12,153,076 (1,429,090) 394,666,171 $ 1,478,848,991 $ 58,617,525 (3,529,083) $ 1,533,937,433 - 35 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 8 - Authorized Grants and Expended Grants (Unaudited) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2023 $ 355,490,792 Transfers/ Additions $ 12,859,968 Cumulative Expended Grants at June 30, 2024 $ 368,350,760 347,816,258 17,577,987 365,394,245 360,424,318 12,881,200 373,305,518 362,450,106 10,084,554 372,534,660 $ 1,426,181,474 $ 53,403,709 $ 1,479,585,183 Cumulative Expended Grants at June 30, 2022 $ 336,968,830 Transfers/ Additions $ 18,521,962 Cumulative Expended Grants at June 30, 2023 $ 355,490,792 328,011,753 19,804,505 347,816,258 337,470,548 22,953,770 360,424,318 351,185,244 11,264,862 362,450,106 72,545,099 $ 1,426,181,474 $ 1,353,636,375 - 36 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 9 – Long-term Liabilities Leases GOCO has entered into agreements to lease its facilities, copy machines, vehicles, and a postage meter. These lease agreements qualify as long-term leases under GASB 87, Leases. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the East Region. The lease calls for total annual payments of $5,781 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury State and Local Government Series (“SLGS”) rate as of October 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,253. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $0 and $5,749, respectively. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the North Central Region. The lease calls for total annual payments of $5,710 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury SLGS rate as of October 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,040. As of June 30, 2024 and 2023, the unamortized balance of this leased asset was $0 and $5,678, respectively. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the West Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,205. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $0 and $5,573, respectively. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the Southern Front Range Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3-year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,205. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $0 and $5,733, respectively. On August 1, 2022, GOCO entered into a lease agreement for a vehicle for use by the regional program officers in the Northern Front Range Region. The lease calls for total annual payments of $6,477 for three years beginning on August 1, 2022. The lease liability was measured using a discount rate of 2.41% which is the 3-year Incremental Borrowing Rate as of August 31, 2022. As a result of the lease, GOCO recorded a lease liability with a value of $18,975. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $6,322 and $12,498, respectively. - 37 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 9 – Long-term Liabilities (continued) On September 1, 2023, GOCO entered into a lease agreement for a vehicle for use by Denver office staff. The lease calls for total annual payments of $6,436 for three years beginning on September 1, 2023. The lease liability was measured at a discount rate of 3.68% which is the 3-year Incremental Borrowing Rate as of September 30, 2023. As a result of this lease, GOCO recorded a lease liability with a value of $18,629. As of June 30, 2024, the unamortized balance of the lease liability was $12,192. On October 18, 2023, GOCO entered into a lease agreement for a vehicle by the regional program officer in the Southwest Region. The lease calls for total annual payments of $7,464 for three years beginning on November 1, 2023. The lease liability was measured at a discount rate of 3.70% which is the 3-year Incremental Borrowing Rate as of October 31, 2023. As a result of this lease, GOCO recorded a lease liability with a value of $21,599. As of June 30, 2024, the unamortized balance of the lease liability was $14,136. GOCO has a lease for a postage meter for use in the Denver office. The postage meter lease calls for quarterly lease payments of $486 through July 2021 and $522 beginning October 2021 through October 2026. The lease liability for the postage meter was measured using the discount rate of 3%. For the year ended June 30, 2022, GOCO recorded a lease liability with a value of $10,107. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $5,011 and $6,912, respectively. In September 2022, GOCO entered into a new lease for its copier machine which calls for monthly lease payments of $205 from January 2023 through January 2027. The lease liability for the new lease was measured using a discount rate of 3.27% which is the 4-year Incremental Borrowing Rate as of September 30, 2023. For the years ended June 30, 2023, GOCO recorded a lease liability with a value of $9,211. As of June 30, 2024 and 2023, the unamortized balance of these copier lease liabilities was $5,970 and $8,214, respectively. In September 2016, GOCO entered into a lease agreement for the Denver office space which included monthly lease payments from July 2020 to January 2024. In March 2022, GOCO signed an amendment to the September 2016 lease agreement which extended the existing lease to April 2027 and included an abatement of three months from April 2022 through June 2022. The monthly lease payments from July 2022 to April 2027 range from $10,736 to $12,452. The lease liability was measured using a discount rate of 2.14% which is the 5-year, 1-month Treasury SLGS rate as of March 17, 2022. As a result of this lease amendment, GOCO retired the original lease liability with a value of $333,350 and recorded a new lease liability with a value of $634,835. As of June 30, 2024 and 2023, the unamortized balance of this lease liability was $394,292 and $519,381, respectively. Subscriptions In March 2022, GOCO entered into a SBITA for accounting software. The subscription calls for total annual payments of $4,426 for three years beginning on March 26, 2022. The subscription liability was measured using a discount rate of 2.09% which is equal to the 3-year Incremental Borrowing Rate as of March 31, 2022. As a result of the lease, GOCO recorded a subscription liability with a value of $13,006. As of June 30, 2024 and 2023, the unamortized balance of this subscription liability was $0 and $4,333, respectively. - 38 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 9 – Long-term Liabilities (continued) In November 2023, GOCO entered into a SBITA for reporting software. The subscription calls for variable annual payments ranging from $3,566 to $3,857 for three years beginning on December 1, 2023. The subscription liability was measured using a discount rate of 2.81% which is equal to the 3-year Incremental Borrowing Rate as of November 30, 2023. As a result of the lease, GOCO recorded a subscription liability with a value of $10,818. As of June 30, 2024, the unamortized balance of this subscription liability was $7,252. A summary of the changes in Long-term Leases and Subscriptions for the year ended June 30, 2024 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Balance June 30, 2023 Additions Retirements Balance June 30, 2024 Amounts due within one year $ $ $ $ $ 569,898 40,228 4,333 $ 574,231 172,203 10,818 $ 51,046 7,899 $ 180,102 437,923 7,252 $ 445,175 156,826 3,504 $ 160,330 A summary of the changes in Long-term Leases and Subscriptions for the year ended June 30, 2023 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Balance July 1, 2022 Additions $ $ 699,645 28,186 8,580 $ 708,225 Retirements Balance June 30, 2023 Amounts due within one year $ $ $ $ 28,186 157,933 4,247 $ 162,180 569,898 4,333 $ 574,231 158,303 4,333 $ 162,636 The future minimum lease obligations and the net present value of the minimum lease and subscription payments as of June 30, 2024, are as follows: Year ending June 30 2025 2026 2027 Principal $ 160,330 161,243 123,602 Interest $ 8,748 4,985 1,221 Total $ 169,078 166,228 124,823 $ 445,175 $ $ 460,129 14,954 - 39 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 9 – Long-term Liabilities (continued) The future minimum lease obligations and the net present value of these minimum lease and subscription payments as of June 30, 2023, are as follows: Year ending June 30 2024 2025 2026 2027 Principal $ 162,636 143,897 144,096 123,602 Interest $ 10,856 7,573 4,375 1,221 Total $ 173,492 151,470 148,471 124,823 $ 574,231 $ $ 598,256 24,025 Note 10 – Commitments and Contingencies Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2024. In Fiscal Year 2024 and 2023, GOCO's expenses on the marketing campaign were approximately $2.0 million each year. The GOCO Board has approved a Fiscal Year 2025 budget of $2.0 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 11 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan, administered by Unified Trust Company, which consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Benefit terms, including contribution requirements, for GOCO’s retirement plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. - 40 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 11 - Pension Plans (continued) Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2024 and 2023, respectively, GOCO recognized pension expense of $13,997 and $15,276, net of forfeitures, which reduced pension expense by $0 and $0. GOCO contributed $208,891 and $199,793 to the Pension Plan for the Fiscal Years ended June 30, 2024 and 2023, respectively, which approximates the required contribution. As of June 30, 2024 and 2023, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 12 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 19 members, 16 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources, and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. - 41 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 13 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 14 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 15 – Project Reimbursements During Fiscal Year 2024, GOCO received a cash payment from a grantee for a payment of cash in lieu of condemnation by a public utility of properties that GOCO funded in Adams County. During Fiscal Year 2024, portions of this property were purchased in lieu of condemnation from the grantee and per the grant agreements, funds in the amount of $85,066 were reimbursed to GOCO. During Fiscal Year 2023, GOCO received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1999, GOCO awarded open space and wildlife purpose funds in the amount of $3.5 million for a land acquisition which is adjacent to the Great Sand Dunes National Park. During Fiscal Year 2023, portions of this property were sold and transferred to the Federal Government and per the grant agreements, funds in the amount of $3.7 million were reimbursed to GOCO. Note 16 – Subsequent Events On December 8, 2023, the Board approved a resolution authorizing an interest-free loan for $6,500,000 for a term of two years to The Conservation Fund to purchase property which will protect and connect land, water, and wildlife within the Dominguez-Escalante National Conservation Area. The loan was finalized on July 15, 2024 and will be due and payable on July 15, 2026. The property will ultimately be conveyed to the Bureau of Land Management to consolidate the property within the surrounding public land. - 42 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2024 and 2023 Note 16 – Subsequent Events (continued) On March 14, 2024, the Board approved a resolution authorizing an interest-free loan for $10,000,000 for a term of up to three years to Pitkin County to purchase property which will protect and connect land, water, and wildlife adjacent to the Maroon Bells-Snowmass Wilderness Area. This loan was finalized on September 25, 2024 and will be due and payable on July 24, 2025, however the loan is subject to annual extension through July 24, 2027. The property will ultimately be conveyed to the United States Forest Service in order to consolidate the property within the surrounding public land. - 43 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2024 Original and Final Budget Actual Variance– Favorable (Unfavorable) $ 80,136,172 1,500,000 - $ 81,771,604 2,283,707 85,066 $ 1,635,432 783,707 85,066 81,636,172 84,140,377 2,504,205 66,209,400 2,827,097 1,055,255 1,999,996 56,500 53,403,709 2,655,935 1,013,331 1,992,612 51,046 12,805,691 171,162 41,924 7,384 5,454 72,148,248 59,116,633 13,031,615 9,487,924 25,023,744 15,535,820 25,000 51,046 26,046 Net change in fund balance 9,512,924 25,074,790 15,561,866 Fund balance – beginning of year 79,292,481 79,292,481 - $ 88,805,405 $104,367,271 $ 15,561,866 Revenues State lottery proceeds Investment earnings and miscellaneous income Project reimbursements Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Fund balance – end of year - 45 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2023 Variance– Favorable (Unfavorable) Original and Final Budget Actual $ 74,192,506 780,000 - $ 75,706,639 (148,799) 3,667,701 74,972,506 79,225,541 4,253,035 61,484,615 2,690,470 894,433 2,180,400 64,700 72,545,099 2,548,490 921,960 2,003,266 34,399 (11,060,484) 141,980 (27,527) 177,134 30,301 67,314,618 78,053,214 (10,738,596) 7,657,888 1,172,327 (6,485,561) 20,000 28,186 8,186 Net change in fund balance 7,677,888 1,200,513 (6,477,375) Fund balance – beginning of year 78,091,968 78,091,968 - $ 85,769,856 $ 79,292,481 $ (6,477,375) Revenues State lottery proceeds Investment earnings and miscellaneous income Project reimbursements Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Fund balance – end of year - 46 - $ 1,514,133 (928,799) 3,667,701 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. GOCO’s general fund did not exceed budgeted amounts for the year ended June 30, 2024. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures for the year ended June 30, 2023. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 47 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities and the major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the GOCO’s basic financial statements and have issued our report thereon dated November 7, 2024. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of GOCO’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE 48 �Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We identified a deficiency in internal control, described in the accompanying Auditor’s Findings and Recommendations as item 2024-001 that we consider to be a material weakness. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. GOCO’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on GOCO’s response to the findings identified in our audit and described in the accompanying Auditor’s Findings and Recommendations. GOCO’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denver, Colorado November 7, 2024 49 �November 7, 2024 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2024, and have issued our report thereon dated November 7, 2024. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated August 14, 2024, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. We have provided our comments regarding internal controls during our audit in our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards dated November 7, 2024. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE 50 �Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during Fiscal Year 2024. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. No such sensitive accounting estimates were identified. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: the disclosure of Note Receivables and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, and Related Parties – State Agencies in Note 12. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. 51 �The following misstatement identified as a result of our audit procedures was brought to the attention of, and corrected by, management: Overstatement of Grants Payable Overstatement of Grants Expense Debit $6,250,000 Credit $6,250,000 The following summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Debit Credit Understatement of Grants Payable Understatement of Grants Expense Overstatement of Grants Payable Overstatement of Opening Net Position / Fund Balance $ $ 384,735 182,647 $ 384,735 $ 182,647 The effect of these uncorrected misstatements, including the effect of the reversal of prior year uncorrected misstatements summarized in the amount of $182,647 as of and for the year ended June 30, 2023, is an understatement of change in fund balance / net position of approximately $567,382, and overstatement of ending fund balance / net position of $384,735. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. We did not identify any circumstances that affect the form and content of the auditor’s report. Representations Requested from Management We have requested certain written representations from management which are included in the management representation letter dated November 7, 2024. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. 52 �Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Information Included in Annual Reports Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in GOCO’s annual reports does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have read the information and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. This report is intended solely for the information and use of the GOCO Board, Management of GOCO, the Legislative Audit Committee, and Office of the State Auditor, and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee, this report is a public document. Denver, Colorado 53 � https://cpw.cvlcollections.org/files/original/1c58c2fe721ce3f7d3c003995e7fe30a.pdf cebe20616bdcc12ee36109ee6f4ce892 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2023 and 2022 �LEGISLATIVE AUDIT COMMITTEE Senator Robert Rodriguez Chair Representative Lisa Frizell Vice Chair Representative Andrew Boesenecker Representative Vacant as of Report Publication Date Representative Gabe Evans Senator Rod Pelton Senator Rhonda Fields Senator Kevin Van Winkle OFFICE OF THE STATE AUDITOR Kerri L. Hunter, CPA, CFE State Auditor Marisa Edwards, CPA Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly LLP Contractor REPORT NUMBER 2322F �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2023 MEMBERS Pamela Denahy – Chair Leticia Martinez Charles Garcia John Montepare Mo Siegel David Cockrell Craig Hughes Brenda May Mina Liebert Krithika Prashant Patty Imhoff Tom Lee Carrie Curtiss Jahi Simbai Mara Brosy-Wiwchar Ray Tschillard Dan Gibbs Jay Tutchton Marie Haskett �September 28, 2023 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2023 and 2022. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 6 Independent Auditor’s Report .................................................................................................................. 7 Management’s Discussion and Analysis ................................................................................................ 10 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2023 ................. 18 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2022 ................. 19 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2023 ............................... 20 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2022 ............................... 21 Notes to Financial Statements .................................................................................................... 22 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2023 ..................................... 41 Budgetary Comparison Schedule – For the Year Ended June 30, 2022 ..................................... 42 Notes to the Required Supplementary Information .................................................................... 43 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 44 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 46 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2023 and 2022 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2023 and 2022. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from June 2023 through September 2023. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2023; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated September 28, 2023, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2023 and 2022, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated September 28, 2023, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2022 and no findings and recommendations reported for fiscal year 2023. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2023 and 2022 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2023. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2023 and 2022 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2023 was the thirtieth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2023, the State Board that oversees GOCO consists of a total of nineteen members: two members of the public from each of the eight congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2023, GOCO had a permanent staff of 23 and received $75.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2023. During Fiscal Year 2022, GOCO had a permanent staff of 22 and received $73.1 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2022. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2023 and 2022 As shown in the tables below and on the following page, GOCO complied with the above policy on authorized and expended grants as of Fiscal Year 2023. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2025). GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. In order to comply with policy, the Board passed a resolution on June 14, 2018, to bring local government authorizations back within substantially equal tolerance on authorizations no later than Fiscal Year 2023. This includes reducing local government spending in the Local Government Purpose in GOCO’s 2021 – 2025 spending plan. As of the end of Fiscal Year 2023, cumulative local government authorizations were within the equal tolerance policy. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represent the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2023 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total % Grants Expended Amount % Cumulative Difference $ 379,720 24.8% $ 355,491 24.9% 381,750 24.9 347,816 24.4 33,934 377,801 24.6 360,424 25.3 17,377 394,666 25.7 362,450 25.4 32,216 $ 1,533,937 100.0% $1,426,181 100.0% Source: Data provided by GOCO -4- 24,229 $ 107,756 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2023 and 2022 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2023 FiveYear Change Funding Purpose 2019 Grants Authorized % 2020 2021 2022 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.5% 24.6% 24.7% 24.6% 24.8% 0.3% 24.0 24.5 24.7 24.8 24.9 0.9% 24.6 24.3 24.3 24.6 24.6 (0.0)% 26.9 26.6 26.3 26.0 25.7 (1.1%) 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years 2023 FiveYear Change Funding Purpose 2019 Grants Expended % 2020 2021 2022 Purpose 1 – Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.4% 24.6% 24.8% 24.9% 24.9% 0.5% 22.9 23.8 24.0 24.2 24.4 1.5% 26.1 25.3 25.1 24.9 25.3 (0.8)% 26.6 26.3 26.1 26.0 25.4 (1.2)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2023 and 2022 There are no findings and recommendations reported for the years ended June 30, 2023 or June 30, 2022. -6- �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2023 and 2022, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of GOCO, as of June 30, 2023 and 2022, and the respective changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of GOCO and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Adoption of New Accounting Standard As discussed in Notes 2 and 16 to the financial statements, GOCO has adopted the provisions of GASB Statement No. 96, Subscription-Based Information Technology Arrangements, which has resulted in a restatement of the net position as of July 1, 2021. In accordance with GASB Statement No. 96, the financial statements as of and for the year ended June 30, 2022, have been restated to reflect this change. Our opinions are not modified with respect to this matter. -7What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. -8- �Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison schedules be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Members of the State Board of the Great Outdoors Colorado Trust Fund and the Description of the State Board of the Great Outdoors Colorado Trust Fund but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 28, 2023 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado September 28, 2023 -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal Years Ended June 30, 2023 and 2022. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 18. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2023, Fiscal Year 2022, and Fiscal Year 2021. 2023 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2022 2021 2023/2022 $ Variance % 2022/2021 $ Variance % $75,706,639 $ 73,117,767 $ 71,718,841 $2,588,872 3.5% $1,398,926 2.0% $72,545,099 $68,048,786 $67,361,617 $4,496,313 6.6% $687,169 1.0% 2023 GOCO received its maximum allowable Lottery proceeds for the year of approximately $75.7 million, per the constitutional cap. This represents a $2.6 million increase over Fiscal Year 2022 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $4.5 million from Fiscal Year 2022. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The total Fiscal Year 2023 actual expenditures exceeded budgeted expenditures by $10.7 million due to grant expenditures exceeding budget expectations. Although we do our best to project grant expenditures for the year, it is important to note that GOCO does not have much control over the timing in which grants get paid out beyond the timeframe delineated in grant agreements. 2022 GOCO received its maximum allowable Lottery proceeds for the year of approximately $73.1 million, per the constitutional cap. This represents a $1.4 million increase over Fiscal Year 2021 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 Grant expenditures increased by $687,169 from Fiscal Year 2021. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The total Fiscal Year 2022 actual expenditures exceeded budgeted expenditures by $7.9 million due to grant expenditures exceeding budget expectations. Although we do our best to project grant expenditures for the year, it is important to note that GOCO does not have much control over the timing in which grants get paid out beyond the timeframe delineated in grant agreements. Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($75.7 million and $73.1 million in Fiscal Year 2023 and Fiscal Year 2022, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund, the Outdoor Equity Fund, the Wildlife Cash Fund, and the Parks and Outdoor Rec Fund for Fiscal Year 2023 and Fiscal Year 2022. - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2023, 2022, and 2021. 2023 93,459,091 575,173 94,034,264 June 30, 2022* $ 90,301,659 748,823 91,050,482 Other liabilities Long-term leases and subscriptions Total liabilities 14,166,610 574,231 14,740,841 12,209,691 708,225 12,917,916 15,827,671 349,100 16,176,771 Net investment in capital assets Unrestricted Total net position 942 79,292,481 79,293,423 40,598 78,091,968 78,132,566 77,962 82,218,422 82,296,384 Current and other assets Capital assets, net Total assets $ $ $ $ $ 2021 98,046,093 427,062 98,473,155 *As restated due to GASB 96 (2022) implementation 2023 The significant portions of current and other assets are cash and advanced grants payments. Cash increased by approximately $9.0 million during Fiscal Year 2023 due to a decrease in Lottery proceeds and notes receivable, increase in grants payable, and a large project reimbursement at year end. The Lottery proceeds receivable decreased by approximately $4.5 million from June 30, 2022. In Fiscal Year 2023, the constitutional cap was met in March and all proceeds were received prior to the end of the fiscal year. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Stewardship Impact programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2023, liabilities increased by approximately $1.8 million from June 30, 2022. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2023 investments of approximately $12.1 million, an increase of approximately $3.0 million from the prior year. Compensated absences increased slightly due to an increase in staff accruing vacation during the year. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 The capital assets and long-term liabilities reported for Fiscal Year 2023 decreased by $173,650 and $133,994, respectively. The decreases are due to the annual amortization of the lease and subscription assets and liability added with the implementation of GASB 87, Leases, and GASB 96, SubscriptionBased Information Technology Arrangements (“SBITA”), which requires governments to recognize an asset and liability for right-to-use assets under long-term lease and subscription agreements. The asset and related liability are amortized over the life of the lease or subscription. 2022 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash decreased by approximately $2.0 million during Fiscal Year 2022 due to an increase in operating costs and grants paid out. The Lottery proceeds receivable decreased by approximately $2.3 million from June 30, 2021. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2022, the constitutional cap was met earlier in the month of April resulting in a lower amount due from Lottery at the end of Fiscal Year 2022. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Stewardship Impact programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2022, liabilities decreased by $3.3 million from June 30, 2021. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2022 investments of approximately $9.1 million, a decrease over the prior year. Accounts payable and compensated absences increased slightly due to the timing of monthly bills and an increase in staff accruing vacation during the year. The restated capital assets and long-term liabilities reported for Fiscal Year 2022 increased by $321,761 and $359,125, respectively, due to the implementation of GASB 87, Leases, which requires governments to recognize a lease liability and an underlying leased asset for leases that were previously classified as operating. These balances were also restated due to the implementation of GASB 96, Subscription-Based Information Technology Arrangements (“SBITA”) which changes the accounting and reporting for Subscription-Based Information Technology Arrangements (“SBITAs”) by governments. Similar to GASB 87, this statement requires governments to calculate the present value of any multi-year IT subscription agreements and amortize the related asset and liability over the life of the agreement. The new SBITA standard, implemented in Fiscal Year 2023 was implemented retroactively to reflect significant SBITA agreements as of July 1, 2021. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2023, 2022 and 2021. Program revenues Lottery revenue General revenues Investment earnings (loss) Miscellaneous income Project reimbursements Total revenue 2023 Fiscal Years Ended June 30, 2022* 2021 $ 75,706,639 $ 73,117,767 $ 71,718,841 (151,650) 2,851 3,667,701 79,225,541 (3,934,020) 1,120 69,184,867 (972,832) 80,196 70,826,205 Program expenses Grants expended Personnel services and benefits Operating Total expenses 72,545,099 2,548,490 2,971,095 78,064,684 68,048,786 2,231,697 3,068,202 73,348,685 67,361,617 1,818,140 3,112,417 72,292,174 Change in net position Beginning net position 1,160,857 78,132,566 (4,163,818) 82,296,384 (1,465,969) 83,762,353 Ending net position $ 79,293,423 $ 78,132,566 $ 82,296,384 *As restated due to GASB 96 implementation 2023 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2023 was a net loss of $151,650 and the Fiscal Year 2022 net loss was $3.9 million, resulting in an increase in investment earnings of $3.8 million. During the year, GOCO received $3.7 million in project reimbursements from the proceeds of land sales from a grantee, as stipulated in their grant agreements from prior years. Grant expenditures in Fiscal Year 2023 increased by $4.5 million from Fiscal Year 2022. GOCO anticipated that grant expenditures would start to increase as the current spending plan was designed to backload larger grant awards in the last few years of the plan. As we begin to award the larger Centennial Program grants in Fiscal Years 2024 – 2025, grant expenditures are expected to continue to increase. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2022 due to anticipated increases in staffing as well as an increase in travel and meeting expenditures as we continue to implement the regional program model. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 2022 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2022 decreased by $3 million. This decrease is largely due to the fact that GOCO’s investments held by the State Treasury experienced a decrease in the unrealized loss on investments of $4.8 million which was offset by earned interest income in the amount of $862,002. Grant expenditures in Fiscal Year 2022 increased by $687,169 from Fiscal Year 2021. GOCO anticipated that grant expenditures would level off as the spending plan was designed to backload larger grant awards in Fiscal Years 2023 - 2025. As we begin to award the larger Centennial Program grants, these expenditures are expected to increase. GOCO’s personnel services and benefits expenditures increased slightly from Fiscal Year 2021 due to anticipated increase in staffing as well as an increase in travel and meeting expenditures as we saw the COVID-19 restrictions ease during the last half of Fiscal Year 2022. Capital Assets and Debt Administration Capital Assets (See Note 7) The following table reflects capital assets at year-end net of depreciation and amortization as of June 30, 2023, 2022 and 2021. Furniture and equipment Leasehold improvements Intangible assets Leased assets Subscription assets Total, net capital assets $ 2023 33,594 1,763 32,416 503,065 4,335 $ 575,173 $ $ 2022* 36,741 4,786 32,416 666,209 8,671 748,823 2021 $ 42,166 7,808 32,416 344,672 - $ 427,062 *As restated due to GASB 96 implementation, effective as of July 1, 2021 2023 GOCO reported net capital assets of $575,173 for Fiscal Year 2023. This amount represents a net decrease of $173,650 from Fiscal Year 2022. The most significant reason for this decrease was due to the depreciation of subscription and leased assets added in the implementation of GASB 96, SBITAs and GASB 87, Leases. The balance of the leased and subscription assets was $503,065 and $4,335, respectively, net of accumulated amortization for Fiscal Year 2023. - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 2022 GOCO reported a restated net capital assets of $748,823 for Fiscal Year 2022, which is a net increase of $321,761 from Fiscal Year 2021 (see Note 7). The most significant reason for this increase was that subscription assets were added for the implementation of GASB 96, SBITAs and due to the restructuring of the lease of GOCO’s Denver office space in March 2022, which resulted in an increase in the value of leased assets under GASB 87, Leases. The balance of the leased and subscription assets was $666,209 and $8,671, respectively, net of accumulated amortization for Fiscal Year 2022. Long-term Lease and Subscription Liabilities 2023 GOCO reported long-term leases and subscriptions of $574,231 for Fiscal Year 2023, a decrease of $133,994 over Fiscal Year 2022 (see Note 9). This decrease is primarily due to the amortization of the lease liabilities previously recorded through the implementation of GASB 87, Leases and GASB 96, SBITAs. 2022 GOCO reported restated long-term leases and subscriptions of $708,225 for Fiscal Year 2022, an increase of $359,125 over Fiscal Year 2021 (see Note 9). This increase is primarily due to the retroactive implementation of GASB 96, SBITAs which resulted in an increase of $13,006 in the net subscription liability as well as the restructuring of the lease of GOCO’s Denver office space in March 2022, which resulted in an increase of $350,545 in the net lease liability under GASB 87, Leases. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $80.1 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2024. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to start increasing in the next two years as the 5-year spending plan has been structured to award higher funds in Fiscal Years 2024 and 2025. As GOCO enters the fourth year of its current 5-year spending plan, focus will continue to be on the Generation Wild, Youth Corps, and RESTORE programs as well as the Centennial, Community Impact, Land Acquisition, Planning and Capacity, and Stewardship Impact program funding from GOCO’s new program portfolio established under the 2021 strategic plan. As noted above, the current 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2024 – 2025) in order to identify and prepare large impactful projects for the new Centennial Program. The Centennial Program is GOCO’s strategic initiative aimed at encouraging multi-purpose, transformational projects. Priority will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (article XXVII). - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2023 and 2022 Also, GOCO is budgeting $5.9 million for Fiscal Year 2024 operating expenditures. The increase from the prior year is primarily due to the continued rollout of the regional program model. Part of GOCO’s strategic plan implementation includes expanding program staff into different areas of Colorado to work collaboratively with grantees and partners and Fiscal Year 2024 will mark the first year that GOCO has fully funded seven regional officer positions. The Fiscal Year 2024 budget also includes an increase in salaries for most full-time employees. 2024 budgeted operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay $ 2,827,097 1,055,251 2,000,000 56,500 Total 2024 Budgeted Operating Expenditures $ 5,938,848 - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2023 Adjustments (Note 3) Statement of Net Position $ 89,487,566 79,984 25,531 3,866,010 - $ 575,173 $ 89,487,566 79,984 25,531 3,866,010 575,173 $ 93,459,091 $ 575,173 $ 94,034,264 13,859,083 151,802 155,725 - 13,859,083 151,802 155,725 - 162,636 411,595 162,636 411,595 Total liabilities 14,166,610 574,231 14,740,841 Fund Balances/Net Position Fund balances Nonspendable Assigned 79,984 79,212,497 (79,984) (79,212,497) - Total fund balances 79,292,481 (79,292,481) - Net Position Net investment in capital assets Unrestricted 942 79,292,481 942 79,292,481 Total Net Position $ 79,293,423 $ 79,293,423 General Fund Assets Cash and investments Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation Total assets Liabilities Grants payable Accounts payable Compensated absences payable Long-term leases and subscriptions Due within one year Due in more than one year Total liabilities and fund balances - $ 93,459,091 See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2022 Adjustments (Note 3) Statement of Net Position $ 80,459,405 4,496,728 2,850,000 85,601 24,810 2,385,115 - $ 748,823 $ 80,459,405 4,496,728 2,850,000 85,601 24,810 2,385,115 748,823 $ 90,301,659 $ 748,823 $ 91,050,482 11,678,959 396,330 134,402 - 11,678,959 396,330 134,402 - 154,707 553,518 154,707 553,518 Total liabilities 12,209,691 708,225 12,917,916 Fund Balances/Net Position Fund balances Nonspendable Assigned 85,601 78,006,367 (85,601) (78,006,367) - Total fund balances 78,091,968 (78,091,968) - Net Position Net investment in capital assets Unrestricted 40,598 78,091,968 40,598 78,091,968 Total Net Position $ 78,132,566 $ 78,132,566 General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation Total assets Liabilities Grants payable Accounts payable Compensated absences payable Long-term leases and subscriptions Due within one year Due in more than one year Total liabilities and fund balances - $ 90,301,659 See Notes to the Financial Statements - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2023 General Fund Adjustments (Note 3) Statement of Activities $ 45,869 (34,399) $ 72,545,099 2,548,490 2,971,095 - Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay $ 72,545,099 2,548,490 2,925,226 34,399 Total expenditures/expenses 78,053,214 11,470 78,064,684 Program revenues - State Lottery proceeds 75,706,639 - 75,706,639 Net program revenues (expenses) (2,346,575) General Revenues Other income Investment earnings (loss) Project reimbursements Total General revenues (loss) Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Change in fund balance (11,470) 2,851 (151,650) 3,667,701 - 2,851 (151,650) 3,667,701 3,518,902 - 3,518,902 1,172,327 (11,470) 1,160,857 28,186 (28,186) - 1,200,513 (1,200,513) - 1,160,857 1,160,857 40,598 78,132,566 942 $ 79,293,423 Change in net position Fund balance/net position - beginning of the year, as restated Fund balance/net position - end of the year 78,091,968 $ 79,292,481 See Notes to the Financial Statements - 20 - (2,358,045) $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2022 General Fund Adjustments (Note 3) Statement of Activities $ 40,325 (731,842) $ 68,048,786 2,231,697 3,068,202 - (691,517) 73,348,685 Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay $ 68,048,786 2,231,697 3,027,877 731,842 Total expenditures/expenses 74,040,202 Program revenues - State Lottery proceeds 73,117,767 - 73,117,767 (922,435) 691,517 (230,918) 1,120 (3,934,020) - 1,120 (3,934,020) (3,932,900) - (3,932,900) (4,855,335) 691,517 (4,163,818) 715,875 13,006 (715,875) (13,006) - 728,881 (728,881) - (4,126,454) 4,126,454 - Net program revenues (expenses) General Revenues Other income Investment earnings (loss) Total General revenues (loss) Excess (deficiency) of revenues over expenditures Other Financing Sources Leases Subscriptions Total other financing sources Change in fund balance Change in net position - (4,163,818) (4,163,818) Fund balance/net position - beginning of the year, as restated 82,218,422 77,962 82,296,384 Fund balance/net position - end of the year, as restated $ 78,091,968 40,598 $ 78,132,566 See Notes to the Financial Statements - 21 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 2 - Summary of Significant Accounting Policies (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures as of June 30, 2023 and higher than budgeted grant expenditures and the implementation of GASB 87, Leases, as of June 30, 2022. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5–7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. GOCO has recorded lease and subscription assets as a result of implementing GASB 87, Leases and GASB 96, Subscription-Based Information Technology Arrangements (“SBITAs”).The lease and subscription assets are initially measured at an amount equal to the initial measurement of the related lease and subscription liability plus any lease and subscription payments made prior to the lease term, less incentives, and plus any ancillary charges necessary to place the underlying asset into service. These assets are amortized on a straight-line basis over the life of the related lease or SBITA. - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 2 - Summary of Significant Accounting Policies (continued) Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements as the following conditions of GASB 16, Accounting for Compensated Absences, have been met: 1. The employees' rights to receive compensation are attributable to services already rendered and; 2. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. GASB Interpretation No. 6 requires leave balances that will be liquidated with expendable available financial resources (current liabilities) be accrued and reported as a governmental fund liability and expenditure. GOCO budgeted for compensated absences in the current year with current financial resources. Therefore, the full liability was accrued and reported in the Government-wide and fund financial statements. Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. Prepaid items). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. The Board can modify or rescind a commitment of resources through passage of a new resolution. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance recorded in the General Fund on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2023 and 2022 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 2 - Summary of Significant Accounting Policies (continued) State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2023 and 2022 was approximately $75.7 million and $73.1 million, respectively, which was the maximum amount allowable under the State Constitution. Implementation of GASB Statements As of July 1, 2021, GOCO adopted GASB 96, Subscription-Based Information Technology Arrangements (“SBITAs”). The implementation of this standard establishes that a SBITA results in a right-to-use subscription asset and a corresponding subscription liability for subscriptions that previously were classified as operating expense and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The effect of the implementation of this standard on beginning net position is disclosed in Note 16 and the additional disclosures required by this standard are included in Notes 7 and 9. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The adjustments pertain to capital assets and long-term debt as outlined below. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $575,173 and $748,823 adjustments to capital assets as of June 30, 2023 and 2022, respectively, represent the capital assets of GOCO, net of accumulated depreciation and amortization of leased and subscription assets. Certain liabilities, such as lease and subscription liabilities, are not due and payable in the current period and therefore are not reported in the balance sheet. The $574,231 and $708,225 adjustments to long-term lease and subscription liabilities as of June 30, 2023 and 2022, respectively, represent the long-term lease liability of GOCO, net of accumulated amortization. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. This adjustment pertains to capital assets and lease and subscription liabilities. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. In addition, certain capital additions were financed through leases and Subscription-Based Information Technology Arrangements (“SBITA”). In governmental funds, a lease or SBITA is considered a source of financing, but in the statement of net position, the lease or SBITA is reported as a long-term liability. This adjustment represents the amount by which depreciation and amortization expense and loss on disposals of assets exceeded capital outlays and lease proceeds in the periods presented. The details of this adjustment are as follows: Depreciation expense Amortization of leased and subscription assets Gain/Loss on restructuring of leased asset/liability Amortization of long-term leases and subscriptions Debt retired on restructuring of lease Increase in operating expenses Capital outlay Leased and subscription asset capital outlays Decrease in capital outlay expense For the Fiscal Years Ended June 30, 2023 2022* $ (12,383) $ (11,407) (162,868) (165,235) 1,820 (233,439) 127,562 36,227 333,529 (45,869) (40,325) 6,213 2,961 28,186 728,881 34,399 731,842 New leases or subscriptions recorded Net adjustment to increase (decrease) net change in fund balance to arrive at change in net position Change in fund balance Change in net position $ *As Restated due to GASB 96 Implementation - 27 - (28,186) (728,881) (39,656) 1,200,513 (37,364) (4,126,454) 1,160,857 $ (4,163,818) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2023, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2023 Bank Balance $ 299,083 Carrying Balance $ 294 285,359 $ $ 299,083 285,653 As of June 30, 2022, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2022 Bank Balance $ 323,240 Carrying Balance $ 199 76,867 $ $ 323,240 77,066 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 4 - Cash Deposits and Investments (continued) Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2023, GOCO had cash invested with the State Treasurer of $89,201,913 which represented approximately 0.47 percent of the total $18,810.90 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2023, the Pool’s resources included $35.0 million of cash on hand and $18,775.8 million of investments. As of June 30, 2022, GOCO had cash invested with the State Treasurer of $80,382,339 which represented approximately 0.38 percent of the total $21,060.9 million fair value of deposits in the State Treasurer’s Pool (Pool). On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pools, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Annual Comprehensive Financial Report for the year ended June 30, 2023. Summary Total cash deposits and investments are as follows: Cash deposits Investments $ $ - 29 - June 30, 2023 2022 285,653 $ 77,066 89,201,913 80,382,339 89,487,566 $ 80,459,405 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 4 - Cash Deposits and Investments (continued) Investment Earnings Investment earnings are composed of the following: June 30, Investment income Adjustment for unrealized gain (loss) on investments held by the State $ $ 2023 2,267,683 $ 2022 862,002 (2,419,333) (4,796,042) (151,650) $ (3,934,040) Note 5 - Lottery Proceeds Receivable As of June 30, 2023, and 2022, GOCO had distributions owed from the Lottery amounting to $0 and $4,496,728, respectively. As of June 30, 2023, the receivable is $0 as GOCO reached the constitutional cap (Note 2) in March 2023 and all funds were received by Lottery prior to the end of the fiscal year. For the receivable as of June 30, 2022 this represents GOCO’s allocation of net proceeds from the Lottery for Lottery for April 2022. These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On October 14, 2021, GOCO entered into a zero-interest promissory note with The Conservation Fund, (“TCF”) in the amount of $2,850,000 for the acquisition of a land parcel for inclusion into the Sand Creek Massacre National Historic Site. Per the loan agreement, the loan is due on October 14, 2023 and is interest-free through October 14, 2023, after which time the interest rate will equal the Prime Rate published in the Money Rates section of the Wall Street Journal. On September 20, 2022, the Sand Creek Massacre property was sold to the National Parks Service and the loan balance was paid in full on September 22, 2022. During Fiscal Years 2023 and 2022, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered an eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds are expensed by GOCO when the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $3,866,010 at June 30, 2023 and $2,385,115 at June 30, 2022. - 30 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2023 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2022, as restated $ 56,320 26,014 41,811 32,416 22,164 634,835 108,151 13,006 934,717 Additions $ 6,213 28,186 34,399 Retirements $ (32,798) (32,798) Balance June 30, 2023 $ 62,533 26,014 41,811 32,416 22,164 602,037 136,337 13,006 936,318 (38,461) (26,014) (22,929) (17,378) (31,221) (45,556) (4,335) (5,318) (4,042) (3,023) (118,100) (40,432) (4,336) - (43,779) (26,014) (26,971) (20,401) (149,321) (85,988) (8,671) $ (185,894) 748,823 $ (175,251) (140,852) $ (32,798) $ (361,145) 575,173 An analysis of the changes in capital assets for the year ended June 30, 2022 follows: Equipment Software Furniture Intangible assets Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total capital assets Less accumulated depreciation and amortization of Equipment Software Furniture Leasehold improvements Right-of-use building lease Right-of-use leased equipment Right-of-use subscription assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2021, as restated $ 76,617 125,052 38,850 32,416 22,164 456,267 27,111 778,477 Additions $ 2,961 634,835 81,040 13,006 731,842 Retirements $ (20,297) (99,038) (456,267) (575,602) Balance June 30, 2022, as restated $ 56,320 26,014 41,811 32,416 22,164 634,835 108,151 13,006 934,717 (54,118) (125,052) (19,183) (14,356) (127,330) (11,376) - (4,639) (3,746) (3,022) (126,720) (34,180) (4,335) 20,296 99,038 222,829 - (38,461) (26,014) (22,929) (17,378) (31,221) (45,556) (4,335) (351,415) 427,062 (176,642) 555,200 342,163 (233,439) (185,894) 748,823 $ - 31 - $ $ $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2023 and 2022. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2022 Transfers/ Additions $ 364,004,786 $ 16,262,272 366,784,045 16,131,965 (1,166,339) 381,749,671 364,117,975 14,070,212 (387,008) 377,801,179 383,942,185 12,153,076 (1,429,090) 394,666,171 $ 1,478,848,991 $ 58,617,525 $ (3,529,083) $ 1,533,937,433 Transfers/ Deletions Cumulative Authorized Grants at June 30, 2022 Cumulative Authorized Grants at June 30, 2021 Transfers/ Additions $ 350,361,664 $ 14,973,588 350,205,423 Transfers/ Deletions $ (546,646) $ 379,720,412 (1,330,466) $ 364,004,786 18,835,050 (2,256,428) 366,784,045 343,850,853 20,157,268 109,854 364,117,975 372,316,798 11,377,372 248,015 383,942,185 $ 1,416,734,738 $ 65,343,278 (3,229,025) $ 1,478,848,991 - 32 - $ Cumulative Authorized Grants at June 30, 2023 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 8 - Authorized Grants and Expended Grants (Unaudited) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2022 $ 336,968,830 $ 355,490,792 328,011,753 19,804,505 347,816,258 337,470,548 22,953,770 360,424,318 351,185,244 11,264,862 362,450,106 72,545,099 $ 1,426,181,474 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2021 $ 319,022,940 $ Cumulative Expended Grants at June 30, 2023 18,521,962 $ 1,353,636,375 Funding Purpose Transfers/ Additions $ Transfers/ Additions 17,945,890 $ 336,968,830 308,209,179 19,802,574 328,011,753 323,114,910 14,355,638 337,470,548 335,240,560 15,944,684 351,185,244 68,048,786 $ 1,353,636,375 $ 1,285,587,589 $ Cumulative Expended Grants at June 30, 2022 $ Note 9 – Long-term Liabilities Leases GOCO has entered into agreements to lease its facilities, copy machines, vehicles, and a postage meter. These lease agreements qualify as long-term leases under GASB 87, Leases. - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 9 – Long-term Liabilities (continued) On September 1, 2020, GOCO entered into a lease agreement for a vehicle for use by Denver office staff. The lease calls for total annual payments of $7,025 for three years beginning on September 1, 2020. The lease liability was measured at a discount rate of 0.13% which is the 3-year Treasury State and Local Government Series (“SLGS”) rate as of September 1, 2020. As a result of this lease, GOCO recorded a lease liability with a value of $21,044. As of June 30, 2023 and 2022, the unamortized balance of the lease liability was $0 and $7,013, respectively. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the East Region. The lease calls for total annual payments of $5,781 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury SLGS rate as of October 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,253. As of June 30, 2023 and 2022, the unamortized balance of this lease liability was $5,749 and $11,472, respectively. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the North Central Region. The lease calls for total annual payments of $5,710 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury SLGS rate as of October 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,040. As of June 30, 2023 and 2022, the unamortized balance of this leased asset was $5,678 and $11,330, respectively. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the West Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,205. As of June 30, 2023 and 2022, the unamortized balance of this lease liability was $5,573 and $11,424, respectively. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the Southern Front Range Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3-year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a lease liability with a value of $17,205. As of June 30, 2023 and 2022, the unamortized balance of this lease liability was $5,733 and $11,424, respectively. On August 1, 2022, GOCO entered into a lease agreement for a vehicle for use by the regional program officers in the Northern Front Range Region. The lease calls for total annual payments of $6,477 for three years beginning on August 1, 2022. The lease liability was measured using a discount rate of 2.41% which is the 3-year Incremental Borrowing Rate as of August 31, 2022. As a result of the lease, GOCO recorded a lease liability with a value of $18,975. As of June 30, 2023, the unamortized balance of this lease liability was $12,498. - 34 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 9 – Long-term Liabilities (continued) GOCO has a lease for a postage meter for use in the Denver office. The postage meter lease calls for quarterly lease payments of $486 through July 2021 and $522 beginning October 2021 through October 2026. The lease liability for the postage meter was measured using the discount rate of 3%. For the year ended June 30, 2022, GOCO recorded a lease liability with a value of $10,107. As of June 30, 2023 and 2022, the unamortized balance of this lease liability was $6,912 and $8,214, respectively. GOCO has a lease for a copier for use in the Denver office. This lease calls for monthly lease payments of $210 through December 2021 and $189 from January 2022 through December 2022 with an implied interest rate of 3%. In September 2022, GOCO entered into a new lease for its copier machine which calls for monthly lease payments of $205 from January 2023 through January 2027. The lease liability for the new lease was measured using a discount rate of 3.27% which is the 4-year Incremental Borrowing Rate as of September 30, 2023. For the years ended June 30, 2023 and 2022, GOCO recorded a lease liability with a value of $9,211 and $2,231, respectively. As of June 30, 2023 and 2022, the unamortized balance of these copier lease liabilities were $8,758 and $1,123, respectively. In September 2016, GOCO entered into a lease agreement for the Denver office space. GASB 87, Leases, is required to be implemented retroactively to July 1, 2020, therefore this lease was calculated using a measurement date of July 1, 2020. The monthly lease payment from July 2020 to January 2024 ranges from $10,185 to $11,012. The lease liability was measured using a discount rate of 0.19% which is the 3-year, 7-month Treasury SLGS rate as of July 1, 2020. As a result of the lease, GOCO recorded a lease liability with a value of $456,268. In March 2022, GOCO signed an amendment to the September 2016 lease agreement for the Denver office space. This lease extended the existing lease to April 2027 and included an abatement of three months from April 2022 through June 2022. The monthly lease payments from July 2022 to January 2024 range from $10,736 to $12,452. The lease liability was measured using a discount rate of 2.14% which is the 5-year, 1-month Treasury SLGS rate as of March 17, 2022. As a result of this lease amendment, GOCO retired the lease liability with a value of $333,350 and recorded a new lease liability with a value of $634,835. As of June 30, 2023 and 2022, the unamortized balance of this lease liability was $637,101 and $519,380, respectively. Subscriptions In March 2022, GOCO entered into a SBITA for accounting software. The subscription calls for total annual payments of $4,426 for three years beginning on March 26, 2022. The subscription liability was measured using a discount rate of 2.09% which is equal to the 3-year Incremental Borrowing Rate as of March 31, 2022. As a result of the lease, GOCO recorded a subscription liability with a value of $13,006. As of June 30, 2023 and 2022, the unamortized balance of this subscription liability was $4,333 and $8,580, respectively. - 35 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 9 – Long-term Liabilities (continued) A summary of the changes in Long-term Leases and Subscriptions for the year ended June 30, 2023 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Balance July 1, 2022, as restated Additions $ $ 699,645 28,186 8,580 $ 708,225 Retirements Balance June 30, 2023 Amounts due within one year $ $ $ $ 28,186 157,933 4,247 $ 162,180 569,898 4,333 $ 574,231 158,303 4,333 $ 162,636 A summary of the changes in Long-term Leases and Subscriptions for the year ended June 30, 2022 follows: Long-term Lease Liabilities Long-term Subscription Liabilities Balance July 1, 2021, as restated Additions $ $ 349,100 715,875 $ 349,100 Retirements Balance June 30, 2022, as restated Amounts due within one year $ $ $ 13,006 $ 728,881 365,330 4,426 $ 369,756 699,645 8,580 $ 708,225 150,460 4,247 $ 154,707 The future minimum lease obligations and the net present value of the minimum lease and subscription payments as of June 30, 2023, are as follows: Year ending June 30 2024 2025 2026 2027 Principal $ 162,636 143,897 144,096 123,602 Interest $ 10,856 7,573 4,375 1,221 Total $ 173,492 151,470 148,471 124,823 $ 574,231 $ $ 598,256 24,025 - 36 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 9 – Long-term Liabilities (continued) The future minimum lease obligations and the net present value of these minimum lease and subscription payments as of June 30, 2022, are as follows: Year ending June 30 2023 2024 2025 2026 2027 Principal $ 154,707 154,215 135,263 141,712 122,328 Interest $ 13,090 10,233 7,202 4,272 1,225 Total $ 167,797 164,448 142,465 145,984 123,553 $ 708,225 $ $ 744,247 36,022 Note 10 – Commitments and Contingencies Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2024. In Fiscal Year 2023 and 2022, GOCO's expenses on the marketing campaign were approximately $2.0 million and $2.1 million, respectively. The GOCO Board has approved a Fiscal Year 2024 budget of $2.0 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 11 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan, administered by Unified Trust Company, that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Benefit terms, including contribution requirements, for GOCO’s retirement plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. - 37 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 11 - Pension Plans (continued) Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2023 and 2022, respectively, GOCO recognized pension expense of $15,276 and $12,163, net of forfeitures, which reduced pension expense by $0 and $0. GOCO contributed $199,793 and $173,300 to the Pension Plan for the Fiscal Years ended June 30, 2023 and 2022, respectively, which approximates the required contribution. As of June 30, 2023, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 12 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 19 members, 16 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources, and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. - 38 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2023 and 2022 Note 13 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 14 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 15 – Project Reimbursements During Fiscal Year 2023, GOCO received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1999, GOCO awarded open space and wildlife purpose funds in the amount of $3.5 million for a land acquisition which is adjacent to the Great Sand Dunes National Park. During Fiscal Year 2023, portions of this property were sold and transferred to the Federal Government and per the grant agreements, funds in the amount of $3.7 million were reimbursed to GOCO. Note 16 – Adoption of New Standards As of July 1, 2021, GOCO implemented GASB 96, Subscription-Based Information Technology Arrangements (“SBITA”). This standard establishes a model for subscription accounting based on the foundational principle that leases are financings of the right to use an underlying subscription asset. The Statement requires recognition of certain subscription assets and liabilities for subscriptions that previously were classified as operating expenditures and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. This standard was implemented retroactively as of July 1, 2021, therefore the net position reported in the Statement of Activities was increased by $91 from amounts originally reported for the year ended June 30, 2022. Net position, at June 30, 2022 as previously reported Subscription asset ($13,006), net of amortization ($4,335) under GASB 96 Subscription liability ($13,006), net of amortization ($4,426) under GASB 96 Net position, at June 30, 2022 as restated - 39 - $ 78,132,475 8,671 (8,580) $ 78,132,566 �REQUIRED SUPPLEMENTARY INFORMATION - 40 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2023 Variance– Favorable (Unfavorable) Original and Final Budget Actual $ 74,192,506 780,000 - $ 75,706,639 (148,799) 3,667,701 74,972,506 79,225,541 4,253,035 61,484,615 2,690,470 894,433 2,180,400 64,700 72,545,099 2,548,490 921,960 2,003,266 34,399 (11,060,484) 141,980 (27,527) 177,134 30,301 67,314,618 78,053,214 (10,738,596) 7,657,888 1,172,327 (6,485,561) 20,000 28,186 8,186 Net change in fund balance 7,677,888 1,200,513 (6,477,375) Fund balance – beginning of year 78,091,968 78,091,968 - $ 85,769,856 $ 79,292,481 $ (6,477,375) Revenues State lottery proceeds Investment earnings and miscellaneous income Project reimbursements Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources - Leases Fund balance – end of year - 41 - $ 1,514,133 (928,799) 3,667,701 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2022 Variance– Favorable (Unfavorable) Original and Final Budget Actual $ 71,163,020 950,000 $ 73,117,767 (3,932,900) 72,113,020 69,184,867 (2,928,153) 60,555,990 2,377,278 1,037,905 2,123,109 76,000 68,048,786 2,231,697 910,521 2,117,356 731,842 (7,492,796) 145,581 127,384 5,753 (655,842) 66,170,282 74,040,202 (7,869,920) 5,942,738 (4,855,335) (10,798,073) - 715,875 13,006 715,875 13,006 - 728,881 728,881 Net change in fund balance 5,942,738 (4,126,454) (10,069,192) Fund balance – beginning of year 82,218,422 82,218,422 $ 88,161,160 $ 78,091,968 Revenues State lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources Leases Subscriptions Total other financing sources Fund balance – end of year - 42 - $ 1,954,747 (4,882,900) $ (10,069,192) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 43 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities and the major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements and have issued our report thereon dated September 28, 2023. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. - 44 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denver, Colorado September 28, 2023 - 45 - �September 28, 2023 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2023, and have issued our report thereon dated September 28, 2023. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated May 19, 2023, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. - 46 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Significant Risks Identified As stated in our auditor’s report, professional standards require us to design our audit to provide reasonable assurance that the financial statements are free of material misstatement whether caused by fraud or error. In designing our audit procedures, professional standards require us to evaluate the financial statements and assess the risk that a material misstatement could occur. Areas that are potentially more susceptible to misstatements, and thereby require special audit considerations, are designated as “significant risks.” We have identified the following as significant risks: • Management override of controls – Professional standards require auditors to address the possibility of management overriding controls, which is inherent to every entity. Accordingly, we identified as a significant risk that management of the organization may have the ability to override controls that the organization has implemented. • Grant expenditures – There is a risk surrounding noncompliance with State statutes in expending grants in accordance with the four funding purposes on a substantially equal basis. As part of this, the risk surrounding improper cutoff of grant expenditures is also present in order to manage results over the four funding purposes. • Revenue recognition – We identified revenue recognition as a significant risk due to the infrequency and material amount of project reimbursements to ensure revenue is recognized at the proper amount and in the proper period. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. As described in Notes 2 and 16, GOCO changed accounting policies related to accounting for right-to-use subscription assets to adopt the provisions of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. Accordingly, the accounting change has been retrospectively applied to the financial statements beginning July 1, 2021. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. No such significant accounting estimates were identified. - 47 - �Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to the disclosure of Note Receivables and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, and Related Parties – State Agencies in Note 12. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. The following summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Debit Overstatement of Grants Payable Overstatement of Grants Expense Understatement of Opening Net Position / Fund Balance $ 733,575 Understatement of Rent Expense Understatement of Opening Net Position / Fund Balance $ 57,396 Credit $ $ 182,647 550,928 $ 57,396 The effect of these uncorrected misstatements, including the effect of the reversal of prior year uncorrected misstatements summarized in the amount of $57,396 as of and for the year ended June 30, 2022, is an understatement of change in fund balance / net position of approximately $125,250, and understatement of ending fund balance / net position of $733,575. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. - 48 - �Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. As described in Notes 2 and 16 to the financial statements, due to the adoption of GASB Statement No. 96, Subscription-Based Information Technology Arrangements, GOCO restated the financial statements as of and for the year ended June 30, 2022. We have included an emphasis of matter in our report regarding this restatement. Representations Requested from Management We have requested certain written representations from management which are included in the management representation letter dated September 28, 2023. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Matters Resulting in Consultation outside the Engagement Team The following significant and relevant matters resulted in consultations outside of our engagement team: We held discussions with Eide Bailly governmental specialists, who were outside of the engagement team, regarding GOCO’s policies for grant expense recognition. The discussions were specific to the reasonableness of the criteria established to determine the point in time when a grantee had met all eligibility requirements, thus triggering the recognition of grant expenses by GOCO. The result of the discussions were that GOCO’s grant expense recognition policies were materially correct. However, as previously communicated, there was an uncorrected misstatement related to the grant expense and grant payable cutoff. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Information Included in Annual Reports Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in GOCO’s annual reports does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have: Read the information and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements. - 49 - �Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. This report is intended solely for the information and use of the GOCO Board, management of GOCO, the Legislative Audit Committee, and Office of the State Auditor, and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee, this report is a public document. Denver, Colorado - 50 - � https://cpw.cvlcollections.org/files/original/18b1a4ec5a6ee33a5c20c5f87ea4f25b.pdf 5ddcaca7d08a1d819fae8dbefe15b6cd PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2022 and 2021 �LEGISLATIVE AUDIT COMMITTEE Senator Jim Smallwood –Chair Senator Robert Rodriguez – Vice Chair Representative Rod Bockenfeld Representative Colin Larson Representative Dylan Roberts Senator Jeff Bridges Representative Dafna Michaelson Jenet Senator Rob Woodward OFFICE OF THE STATE AUDITOR Kerri L. Hunter State Auditor Marisa Edwards Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 2222F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2022 MEMBERS Mo Siegel – Chair Leticia Martinez Charles Garcia John Montepare David Cockrell Craig Hughes Pamela Denahy Brenda May Mina Liebert Tony Rosendo Patty Imhoff Tom Lee Carrie Curtiss Jahi Simbai Marie Haskett Dan Gibbs Jay Tutchton �October 24, 2022 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2022 and 2021. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 6 Independent Auditor’s Report .................................................................................................................. 7 Management’s Discussion and Analysis ................................................................................................ 10 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2022 ................. 17 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2021 ................. 18 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2022 ............................... 19 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2021 ............................... 20 Notes to Financial Statements .................................................................................................... 21 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2022 ..................................... 40 Budgetary Comparison Schedule – For the Year Ended June 30, 2021 ..................................... 41 Notes to the Required Supplementary Information .................................................................... 42 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 43 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 45 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2022 and 2021 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2022 and 2021. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from June 2022 through September 2022. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2022; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated October 24, 2022, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2022 and 2021, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated October 24, 2022, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2021 and no findings and recommendations reported for fiscal year 2022. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2022 and 2021 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2022. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2022 and 2021 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2022 was the twenty-ninth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2022, the State Board that oversees GOCO consists of a total of seventeen members: two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2022, GOCO had a permanent staff of 22 and received $73.1 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2022. During Fiscal Year 2021, GOCO had a permanent staff of 19 and received $71.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2021. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2022 and 2021 As shown in the tables below and on the following page, GOCO complied with the above policy on authorized and expended grants as of Fiscal Year 2022. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2025). GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. In order to comply with policy, the Board passed a resolution on June 14, 2018, to bring local government authorizations back within substantially equal tolerance on authorizations no later than Fiscal Year 2023. This includes reducing local government spending in the Local Government Purpose in GOCO’s 2021 – 2025 spending plan. As of Fiscal Year 2022, local government authorizations were within the equal tolerance policy. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2022 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total % Grants Expended Amount % Cumulative Difference $ 364,005 24.6% $ 336,969 24.9% 366,784 24.8 328,012 24.2 38,772 364,118 24.6 337,471 24.9 26,647 383,942 26.0 351,185 26.0 32,757 $ 1,478,849 100.0% $1,353,637 100.0% Source: Data provided by GOCO -4- 27,036 $ 125,212 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2022 and 2021 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2022 FiveYear Change Funding Purpose 2018 Grants Authorized % 2019 2020 2021 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 23.9% 24.5% 24.6% 24.7% 24.6% 0.7% 23.4 24.0 24.5 24.7 24.8 1.4% 25.3 24.6 24.3 24.3 24.6 (0.7)% 27.4 26.9 26.6 26.3 26.0 (1.4%) 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years 2022 FiveYear Change Funding Purpose 2018 Grants Expended % 2019 2020 2021 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.6% 24.4% 24.6% 24.8% 24.9% 0.3% 22.6 22.9 23.8 24.0 24.2 1.6% 26.7 26.1 25.3 25.1 24.9 (1.8)% 26.1 26.6 26.3 26.1 26.0 (0.1)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2022 and 2021 There are no findings and recommendations reported for the years ended June 30, 2022 or June 30, 2021. -6- �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2022 and 2021, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of GOCO and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Adoption of New Accounting Standard As discussed in Note 16 to the financial statements, GOCO has adopted the provisions of Government Accounting Standards Board (GASB) Statement No. 87, Leases, for the year ended June 30, 2022. Accordingly, a restatement has been made to the governmental activities net position as of July 1, 2021, to restate beginning net position. Our opinions are not modified with respect to this matter. -7What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about GOCO’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. -8- �Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 10 through 16 and 40 through 42 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 24, 2022, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado October 24, 2022 -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2022 and 2021. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 17. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2022, Fiscal Year 2021, and Fiscal Year 2020. 2022 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2021 2020 2022/2021 $ Variance % 2021/2020 $ Variance % $ 73,117,767 $ 71,718,841 $ 70,364,774 $1,398,926 2.0% $1,354,067 1.9% $68,048,786 $67,361,617 $75,040,053 $687,169 1.0% ($7,678,436) (10.2%) 2022 GOCO received its maximum allowable Lottery proceeds for the year of approximately $73.1 million, per the constitutional cap. This represents a $1.4 million increase over Fiscal Year 2021 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $687,169 from Fiscal Year 2021. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. 2021 GOCO received its maximum allowable Lottery proceeds for the year of approximately $71.7 million, per the constitutional cap. This represents a $1.4 million increase over Fiscal Year 2020 in Lottery proceeds to GOCO due to an increase in the Denver-Aurora-Lakewood Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures decreased by $7.7 million from Fiscal Year 2020. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The one-time funding of the Fishers Peak State Park in Fiscal Year 2020 led to a particularly large year for grant expenditures, and GOCO did not have any similar one-time expenditures in Fiscal Year 2021. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($73.1 million and $71.7 million in Fiscal Year 2022 and Fiscal Year 2021, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund, the Outdoor Equity Fund, the Wildlife Cash Fund, and the Parks and Outdoor Rec Fund for Fiscal Year 2022 and Fiscal Year 2021. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2022, 2021, and 2020. 2022 90,301,659 740,152 91,041,811 June 30, 2021* $ 98,046,093 427,062 98,473,155 2020 $ 103,699,911 98,037 103,797,948 Other liabilities Long-term lease liabilities Total liabilities 12,209,691 699,645 12,909,336 15,827,671 349,100 16,176,771 20,035,595 20,035,595 Net investment in capital assets Unrestricted Total net position 40,507 78,091,968 78,132,475 77,962 82,218,422 82,296,384 98,037 83,664,316 83,762,353 Current and other assets Capital assets, net Total assets $ $ *As restated due to GASB 87 implementation - 11 - $ $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 2022 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash decreased by approximately $2.0 million during Fiscal Year 2022 due to an increase in operating costs and grants paid out. The Lottery proceeds receivable decreased by approximately $2.3 million from June 30, 2021. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2022, the constitutional cap was met earlier in the month of April resulting in a lower amount due from Lottery at the end of Fiscal Year 2022. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Stewardship Impact programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2022, liabilities decreased by $3.3 million from June 30, 2021. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2022 investments of approximately $9.1 million, a decrease over the prior year. Accounts payable and compensated absences increased slightly due to timing of monthly bills and increase in staff accruing vacation during the year. The capital assets and long-term liabilities reported for Fiscal Year 2022 increased by $313,090 and $350,545, respectively, due to the implementation of GASB 87, Leases, which requires governments to recognize a lease liability and an underlying leased asset for leases that were previously classified as operating. 2021 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash increased by approximately $5.5 million during Fiscal Year 2021 due to the timing of Lottery proceeds received and a decrease in operating costs and grants paid out. The Lottery proceeds receivable decreased by approximately $11.7 million from June 30, 2020. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2020, the constitutional cap was met later in the year, therefore the amount due from Lottery was higher at the end of Fiscal Year 2020 than Fiscal Year 2021. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Habitat Restoration programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2021, liabilities decreased by $4.2 million from June 30, 2020. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2021 investments of approximately $13.9 million, a decrease over the prior year. Accounts payable and compensated absences also had significant decreases due to timing of monthly bills. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 The capital assets and long-term liabilities reported for Fiscal Year 2021 increased by $427,062 and $349,100, respectively, due to the implementation of GASB 87, Leases, which requires governments to recognize a lease liability and an underlying leased asset for leases that were previously classified as operating. The new lease standard, implemented in Fiscal Year 2022 was required to be implemented retroactively, therefore the statements for Fiscal Year 2021 have been restated to reflect the leases in effect as of July 1, 2020. Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2022, 2021 and 2020. Lottery revenue Investment earnings (loss) Miscellaneous income Total revenue Fiscal Years Ended June 30, 2022 2021 2020 $ 73,117,767 $ 71,718,841 $ 70,364,774 (3,934,040) (972,832) 3,681,652 1,140 80,196 1,000,572 69,184,867 70,826,205 75,046,998 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 68,048,786 2,231,697 3,068,293 73,348,776 67,361,617 1,818,140 3,112,417 72,292,174 75,040,053 1,724,618 3,471,521 80,236,192 Change in net position (4,163,909) (1,465,969) (5,189,194) Beginning net position 82,296,384 83,762,353 88,951,547 Ending net position $ 78,132,475 $ 82,296,384 $ 83,762,353 2022 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Investment earnings in Fiscal Year 2022 decreased by $3 million. This decrease is largely due to the fact that GOCO’s investments held by the State Treasury experienced a decrease in the unrealized loss on investments of $4.8 million which was offset by earned interest income in the amount of $862,002. Grant expenditures in Fiscal Year 2022 increased by $687,169 from Fiscal Year 2021. GOCO anticipated that grant expenditures would level off as the spending plan was designed to backload larger grant awards in Fiscal Years 2023 - 2025. As we begin to award the larger Centennial Program grants, we expect grant expenditures to increase. GOCO’s operating expenditures increased slightly from Fiscal Year 2021 due to anticipated increase in staffing as well as an increase in travel and meeting expenditures as we saw the COVID-19 restrictions ease during the last half of Fiscal Year 2022. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 2021 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2021 decreased by $5.6 million. The decrease is in part due to the fact that GOCO is no longer recognizing grant income from the Colorado Health Foundation, as the final installment of $1 million was recognized during Fiscal Year 2020. Additionally, GOCO’s investments held by the State Treasury experienced a decrease in the unrealized gain on investments of $1.8 million and a decrease in earned interest income of approximately $1 million, for a total decrease of $4.6 million from Fiscal Year 2020. Grant expenditures in Fiscal Year 2021 decreased by $7.7 million from Fiscal Year 2020. This decrease was anticipated as significant capital and land acquisition projects were completed during Fiscal Year 2020 in the outdoor recreation and wildlife purposes – especially the acquisition and development of the new Fishers Peak State Park near Trinidad. GOCO’s operating expenditures decreased from Fiscal Year 2020 primarily due to lack of travel, meetings, and office expenses related to COVID-19 impacts experienced during Fiscal Year 2021. Capital Assets and Debt Administration Capital Assets The following table reflects capital assets at year-end net of depreciation and amortization as of June 30, 2022, 2021 and 2020. Furniture and equipment Leasehold improvements Intangible assets Leased assets (see Note) Total, net capital assets $ $ 2022 36,741 4,786 32,416 666,209 740,152 $ $ 2021 42,166 7,808 32,416 344,672 427,062 $ $ 2020 54,791 10,830 32,416 98,037 Note: GASB 87 implementation effective as of July 1, 2020, therefore no leased assets reported for Fiscal Year 2020. 2022 GOCO reported net capital assets of $740,152 for Fiscal Year 2022. This amount represents a net increase of $313,089 from Fiscal Year 2021. The most significant reason for this increase was due to the restructuring of the lease of GOCO’s Denver office space in March 2022, which resulted in an increase in the value of leased assets under GASB 87, Leases. the balance of the leased assets was $666,209, net of accumulated amortization for Fiscal Year 2022. 2021 GOCO reported net capital assets of $427,062 for Fiscal Year 2021. This amount represents a net increase of $329,025 from Fiscal Year 2020. The most significant reason for this increase was due to the implementation of GASB 87, Leases, which requires governments to record an asset for any leases which contain an underlying right to use leased asset, the balance of the leased assets was $344,672, net of accumulated amortization for Fiscal Year 2021. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 Long-term Liabilities 2022 GOCO reported long-term lease liabilities of $699,645 for Fiscal Year 2022, an increase of $350,545 over Fiscal Year 2021. This increase is primarily due to the restructuring of the lease of GOCO’s Denver office space in March 2022, which resulted in an increase in the net lease liability under GASB 87, Leases. 2021 GOCO reported long-term lease liabilities of $349,100 for Fiscal Year 2021, an increase of $349,100 over Fiscal Year 2020. This increase is due to the net lease liability associated with the implementation of GASB 87, Leases, which requires governments to record a long-term liability for leases that contain a right to use asset. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $74.2 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2023. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to start increasing in the next few years as the 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2023 – 2025). As GOCO enters the third year of its current 5-year spending plan, focus will continue to be on the Generation Wild, Youth Corps, RESTORE, and Fellowship programs as well as the Centennial, Community Impact, Land Acquisition, Planning and Capacity, and Stewardship Impact program funding from GOCO’s new program portfolio established under the 2021 strategic plan. As noted above, the current 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2023 – 2025) in order to identify and prepare large impactful projects for the new Centennial Program. The Centennial Program is GOCO’s strategic initiative aimed at encouraging multi-purpose, transformational projects. Priority will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (article XXVII). Also, GOCO is budgeting $5.8 million for Fiscal Year 2023 operating expenditures. The increase from the prior year is primarily due to the continued rollout of the regional program model. Part of GOCO’s strategic plan implementation includes expanding program staff into different areas of Colorado to work collaboratively with grantees and partners. The Fiscal Year 2023 budget includes the addition of one full-time employee and increasing costs for travel and outreach related to the regional program model. - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2022 and 2021 2023 budgeted operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay $ 2,656,970 1,143,033 2,000,000 30,000 Total 2023 Budgeted Operating Expenditures $ 5,830,003 - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2022 Adjustments (Note 3) Statement of Net Position $ 80,459,405 4,496,728 2,850,000 85,601 24,810 2,385,115 - $ 740,152 $ 80,459,405 4,496,728 2,850,000 85,601 24,810 2,385,115 740,152 $ 90,301,659 $ 740,152 $ 91,041,811 11,678,959 396,330 134,402 - 11,678,959 396,330 134,402 - 150,460 549,185 150,460 549,185 Total liabilities 12,209,691 699,645 12,909,336 Fund Balances/Net Position Fund balances Nonspendable Assigned 85,601 78,006,367 (85,601) (78,006,367) - Total fund balances 78,091,968 (78,091,968) - Net Position Net investment in capital assets Unrestricted 40,507 78,091,968 40,507 78,091,968 Total Net Position $ 78,132,475 $ 78,132,475 General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation Total assets Liabilities Grants payable Accounts payable Compensated absences payable Long-term lease liabilities Due within one year Due in more than one year Total liabilities and fund balances - $ 90,301,659 See Notes to the Financial Statements - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2021 General Fund Assets Cash and investments Lottery proceeds receivable Note receivable Prepaid items Other assets Advanced grant payments Capital assets, net of accumulated depreciation Adjustments (Note 3) 427,062 $ 82,505,367 6,764,369 6,250,000 102,017 17,463 2,406,877 427,062 427,062 $ 98,473,155 15,488,193 241,760 97,718 - 15,488,193 241,760 97,718 - 135,123 213,977 135,123 213,977 Total liabilities 15,827,671 349,100 16,176,771 Fund Balances/Net Position Fund balances Nonspendable Assigned 102,017 82,116,405 (102,017) (82,116,405) - Total fund balances 82,218,422 (82,218,422) - Net position Net investment in capital assets Unrestricted 77,962 82,218,422 77,962 82,218,422 Total net position $ 82,296,384 $ 82,296,384 Total assets $ 82,505,367 6,764,369 6,250,000 102,017 17,463 2,406,877 - $ $ 98,046,093 $ Liabilities Grants payable Accounts payable Compensated absences payable Long-term lease liabilities Due within one year Due in more than one year Total liabilities and fund balances - Statement of Net Position, as restated $ 98,046,093 See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2022 General Fund Adjustments (Note 3) Statement of Activities $ 40,416 (718,836) $ 68,048,786 2,231,697 3,068,293 - (678,420) 73,348,776 Expenditures/expenses Grants expended Personnel services and benefits Operating Capital outlay $ 68,048,786 2,231,697 3,027,877 718,836 Total expenditures/expenses 74,027,196 Program revenues - State Lottery proceeds 73,117,767 - 73,117,767 (909,429) 678,420 (231,009) 1,140 (3,934,040) - 1,140 (3,934,040) (3,932,900) - (3,932,900) (4,842,329) 678,420 (4,163,909) 715,875 (715,875) - (4,126,454) 4,126,454 - Net program revenues (expenses) General Revenues Other income Investment earnings (loss) Total General revenues (loss) Excess (deficiency) of revenues over expenditures Other Financing Sources - Lease proceeds Change in fund balance Change in net position - Fund balance/net position - beginning of the year, as restated Fund balance/net position - end of the year 82,218,422 77,962 82,296,384 $ 78,091,968 $ 4,204,416 $ 78,132,475 See Notes to the Financial Statements - 19 - (4,163,909) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2021 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating and other expenditures $ 67,361,617 1,818,140 3,092,342 Total expenditures/expenses Program revenues - State lottery proceeds Net program revenues (expenses) Adjustments (Note 3) $ 20,075 $ 67,361,617 1,818,140 3,112,417 72,272,099 20,075 72,292,174 71,718,841 - 71,718,841 (553,258) General Revenues Other income Investment earnings (loss) Total General revenues (loss) (20,075) (573,333) 80,196 (972,832) - 80,196 (972,832) (892,636) - (892,636) Excess (deficiency) of revenues over expenditures (1,445,894) (20,075) Change in fund balance (1,445,894) 1,445,894 Change in net position Statement of Activities, as restated (1,465,969) - - (1,465,969) (1,465,969) Fund balance/net position - beginning of the year 83,664,316 98,037 83,762,353 Fund balance/net position - end of the year, as restated $ 82,218,422 77,962 $ 82,296,384 See Notes to the Financial Statements - 20 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 2 - Summary of Significant Accounting Policies (continued) Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures and the implementation of GASB 87, Leases, as of June 30, 2022 and June 30, 2021. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5–7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. GOCO has recorded leased assets as a result of implementing GASB 87, Leases. The lease assets are initially measured at an amount equal to the initial measurement of the related lease liability plus any lease payments made prior to the lease term, less lease incentives, and plus any ancillary charges necessary to place the lease into service. The leased assets are amortized on a straight-line basis over the life of the related lease. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements as the following conditions of GASB 16, Accounting for Compensated Absences, have been met: - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 2 - Summary of Significant Accounting Policies (continued) 1. The employees' rights to receive compensation are attributable to services already rendered and; 2. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. GASB Interpretation No. 6 requires leave balances that will be liquidated with expendable available financial resources (current liabilities) be accrued and reported as a governmental fund liability and expenditure. GOCO budgeted for compensated absences in the current year with current financial resources. Therefore, the full liability was accrued and reported in the Government-wide and fund financial statements. Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance recorded in the General Fund on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2022 and 2021 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 2 - Summary of Significant Accounting Policies (continued) GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2022 and 2021 was approximately $73.1 million and $71.7 million, respectively, which was the maximum amount allowable under the State Constitution. Implementation of GASB Statement No. 87, Leases As of July 1, 2020, GOCO adopted GASB 87, Leases. The implementation of this standard establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The standard requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The effect of the implementation of this standard on beginning net position is disclosed in Note 16 and the additional disclosures required by this standard are included in Notes 7 and 9. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The adjustments pertain to capital assets and long-term debt as outlined below. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $740,152 and $427,062 adjustments to capital assets as of June 30, 2022 and 2021, respectively, represent the capital assets of GOCO, net of accumulated depreciation and amortization of leased assets. Certain liabilities, such as lease liabilities, are not due and payable in the current period and therefore are not reported in the balance sheet. The $699,645 and $349,100 adjustments to long-term lease liabilities as of June 30, 2022 and 2021, respectively, represent the long-term lease liability of GOCO, net of accumulated amortization. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. This adjustment pertains to capital assets and lease liabilities. - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. In addition, certain capital additions were financed through leases. In governmental funds, a lease is considered a source of financing, but in the statement of net position, the lease is reported as a long-term liability. This adjustment represents the amount by which depreciation and amortization expense and loss on disposals of assets exceeded capital outlays and lease proceeds in the periods presented. The details of this adjustment are as follows: Depreciation expense Amortization of leased assets Loss on restructuring of lease Amortization of long-term lease liability Debt retired on restructuring of lease Increase in operating expenses For the Fiscal Years Ended June 30, 2022 2021 $ (11,407) $ (15,647) (160,900) (138,706) (233,439) 31,980 134,278 333,350 (40,416) (20,075) Capital outlay Leased asset capital outlays Decrease in capital outlay expense 2,961 715,875 718,836 - New lease liability recorded (715,875) - Net adjustment to increase (decrease) net change in fund balance to arrive at change in net position (37,455) (20,075) Change in fund balance (4,126,454) (1,445,894) Change in net position $ (4,163,909) $ (1,465,969) Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 4 - Cash Deposits and Investments (continued) As of June 30, 2022, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2022 Bank Balance $ 323,240 Carrying Balance $ 199 76,867 $ $ 323,240 77,066 As of June 30, 2021, GOCO’s cash deposits had bank and carrying balances as follows: Cash on hand Insured deposits June 30, 2021 Bank Balance $ 504,467 Carrying Balance $ 197 391,826 $ $ 504,467 392,023 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2022, GOCO had cash invested with the State Treasurer of $80,382,339 which represented approximately 0.38 percent of the total $21,060.9 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2021, GOCO had cash invested with the State Treasurer of $82,113,344 which represented approximately 0.46 percent of the total $17,699.3 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pools, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Annual Comprehensive Financial Report for the year ended June 30, 2022. Summary Total cash deposits and investments are as follows: 2022 Cash deposits Investments Investment Earnings June 30, 2021 $ 77,066 80,382,339 $ 392,023 82,113,344 $ 80,459,405 $ 82,505,367 Investment earnings are composed of the following: 2022 Investment income Adjustment for unrealized gain (loss) on investments held by the State $ June 30, 862,002 (4,796,042) $ (3,934,040) - 28 - $ 2021 846,043 (1,818,875) $ (972,832) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 5 - Lottery Proceeds Receivable As of June 30, 2022, and 2021, GOCO had distributions owed from the Lottery amounting to $4,496,728 and $6,764,369, respectively. For the receivable as of June 30, 2022, this represents GOCO’s allocation of net proceeds from the Lottery for April 2022, the month in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2021, this represents GOCO’s allocation of net proceeds from the Lottery for Lottery for April 2021. These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On October 14, 2021, GOCO entered into a zero-interest promissory note with The Conservation Fund, (“TCF”) in the amount of $2,850,000 for the acquisition of a land parcel for inclusion into the Sand Creek Massacre National Historic Site. Per the loan agreement, the loan is due on October 14, 2023 and is interest-free through October 14, 2023, after which time the interest rate will equal the Prime Rate published in the Money Rates section of the Wall Street Journal. On September 20, 2022, the Sand Creek Massacre property was sold to the National Parks Service and the loan balance was paid in full on September 22, 2022. On June 30, 2020, GOCO entered into a zero-interest promissory note with TCF in the amount of $6,250,000 for the acquisition of the Sweetwater Lake parcel for inclusion into the White River National Forest. Per the loan agreement, the loan is due on June 30, 2023 and is interest-free through June 30, 2022, after which time the interest rate will equal the Colorado Treasury Pool rate of interest. TCF acquired the property in June 2020 to hold until it is sold to the United States Forest Service (“USFS”) when funds get appropriated from the Land and Water Conservation Fund. On August 31, 2021, the Sweetwater Lake parcel was sold to the USFS, and the loan balance was paid in full on September 2, 2021. During Fiscal Years 2022 and 2021, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered a contingency eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds may not be expensed by GOCO until the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $2,385,115 at June 30, 2022 and $2,406,877 at June 30, 2021. - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2022 follows: Equipment Software Furniture Intangible assets Leasehold improvements Leased assets Total capital assets Less accumulated depreciation of owned assets Less accumulated amortization for leased assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2021, as restated $ 76,617 125,052 38,850 32,416 22,164 483,378 778,477 Additions $ 2,961 715,875 718,836 Retirements $ (20,297) (99,038) (456,267) (575,602) Balance June 30, 2022 $ 56,320 26,014 41,811 32,416 22,164 742,986 921,711 (212,709) (11,407) 119,334 (104,782) (138,706) (160,900) 222,829 (76,777) (351,415) (172,307) 342,163 (181,559) 546,529 $ (233,439) $ 427,062 $ $ 740,152 An analysis of the changes in capital assets for the year ended June 30, 2021 follows: Equipment Software Furniture Intangible assets Leasehold improvements Leased assets Total capital assets Less accumulated depreciation of owned assets Less accumulated amortization for leased assets Total accumulated depreciation and amortization Total capital assets, net Balance July 1, 2020, as restated $ 76,617 125,052 38,850 32,416 22,164 483,378 778,477 Additions $ - Retirements $ - Balance June 30, 2021, as restated $ 76,617 125,052 38,850 32,416 22,164 483,378 778,477 (197,062) (15,647) - (212,709) - (138,706) - (138,706) (197,062) (154,353) - (351,415) 581,415 $ (154,353) $ - 30 - $ - $ 427,062 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2022 and 2021. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2021 Transfers/ Additions $ 350,361,664 $ 14,973,588 350,205,423 Transfers/ Deletions $ Cumulative Authorized Grants at June 30, 2022 (1,330,466) $ 364,004,786 18,835,050 (2,256,428) 366,784,045 343,850,853 20,157,268 109,854 364,117,975 372,316,798 11,377,372 248,015 383,942,185 $ 1,416,734,738 $ 65,343,278 (3,229,025) $ 1,478,848,991 $ Cumulative Authorized Grants at June 30, 2020 Transfers/ Additions $ 336,041,532 $ 14,409,923 334,485,291 16,073,269 (353,137) 350,205,423 331,741,232 12,126,662 (17,041) 343,850,853 364,416,454 8,274,840 (374,496) 372,316,798 $1,366,684,509 $ 50,884,694 (834,465) $1,416,734,738 - 31 - Transfers/ Deletions $ $ (89,791) Cumulative Authorized Grants at June 30, 2021 $ 350,361,664 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2021 Transfers/ Additions Cumulative Expended Grants at June 30, 2022 $ 319,022,940 $ 17,945,890 $ 336,968,830 308,209,179 19,802,574 328,011,753 323,114,910 14,355,638 337,470,548 335,240,560 15,944,684 351,185,244 $ 1,285,587,589 $ 68,048,786 $ 1,353,636,375 Cumulative Expended Grants at June 30, 2020 Transfers/ Additions Cumulative Expended Grants at June 30, 2021 $ 299,571,371 $ 19,451,568 $ 319,022,940 289,965,211 18,243,968 308,209,179 308,389,052 14,725,858 323,114,910 320,300,336 14,940,223 335,240,560 $ 1,218,225,970 $ 67,361,617 $ 1,285,587,589 Note 9 – Long-term Liabilities Leases GOCO has entered into agreements to lease its facilities, copy machines, vehicles, and a postage meter. These lease agreements qualify as long-term leases under GASB 87, Leases, and have been recorded at the present value of the future minimum lease payments as of the date of lease inception or July 1, 2020 for leases in effect during Fiscal Year 2021. - 32 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 9 – Long-term Liabilities (continued) On September 1, 2020, GOCO entered into a lease agreement for a vehicle for use by Denver office staff. The lease calls for total annual payments of $7,025 for three years beginning on September 1, 2020. The lease liability was measured at a discount rate of 0.13% which is the 3-year Treasury State and Local Government Series (“SLGS”) rate as of September 1, 2020. As a result of this lease, GOCO recorded a leased asset with a value of $21,044. This asset and related liability are reported in Fiscal Year 2021. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the East Region. The lease calls for total annual payments of $5,781 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury SLGS rate as of October 1, 2021. As a result of the lease, GOCO recorded a leased asset with a value of $17,253. On October 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the North Central Region. The lease calls for total annual payments of $5,710 for three years beginning on October 1, 2021. The lease liability was measured using a discount rate of 0.51% which is the 3-year Treasury SLGS rate as of October 1, 2021. As a result of the lease, GOCO recorded a leased asset with a value of $17,040. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the West Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a leased asset with a value of $17,205. On November 1, 2021, GOCO entered into a lease agreement for a vehicle for use by the regional program officer in the Southern Front Range Region. The lease calls for total annual payments of $5,781 for three years beginning on November 1, 2021. The lease liability was measured using a discount rate of 0.79% which is the 3-year Treasury SLGS rate as of November 1, 2021. As a result of the lease, GOCO recorded a leased asset with a value of $17,205. GOCO has entered into two separate leases for a copier machine and a postage meter for use in the Denver office. The postage meter lease calls for quarterly lease payments of $486 through July 2021 and $522 beginning October 2021 through October 2026. The copier lease calls for monthly lease payments of $210 through December 2021 and $189 from January 2022 through December 2022 with an implied interest rate of 3%. The lease liability for both leases was measured using the discount rate of 3%. For the year ended June 30, 2021, GOCO recorded leased assets with a value of $2,376 and $3,690 for postage meter and copier, respectively. For the year ended June 30, 2022, GOCO recorded leased assets with a value of $10,107 and $2,231 for postage meter and copier, respectively. - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 9 – Long-term Liabilities (continued) In September 2016, GOCO entered into a lease agreement for the Denver office space. GASB 87, Leases, is required to be implemented retroactively to July 1, 2020, therefore this lease was calculated using a measurement date of July 1, 2020. The monthly lease payment from July 2020 to January 2024 range from $10,185 to $11,012. The lease liability was measured using a discount rate of 0.19% which is the 3-year, 7-month Treasury SLGS rate as of July 1, 2020. As a result of the lease, GOCO recorded lease asset with a value of $456,268. This asset and related liability are reported in Fiscal Year 2021. In March 2022, GOCO signed an amendment to the September 2016 lease agreement for the Denver office space. This lease extended the existing lease to April 2027 and included an abatement of three months from April 2022 through June 2022. The monthly lease payments from July 2022 to January 2024 range from $10,736 to $12,452. The lease liability was measured using a discount rate of 2.14% which is the 5-year, 1-month Treasury SLGS rate as of March 17, 2022. As a result of this lease amendment, GOCO retired the lease asset with a value of $456,268 and recorded a new lease asset with a value of $634,835. A summary of the changes in Long-term Lease Liabilities for the year ended June 30, 2022 follows: Long-term Lease Liabilities Balance July 1, 2021, as restated Retirements Balance June 30, 2022 Amounts due within one year Additions $ 349,100 $ 715,875 $ 365,330 $ 699,645 $ 150,460 $ 349,100 $ 715,875 $ 365,330 $ 699,645 $ 150,460 A summary of the changes in Long-term Lease Liabilities for the year ended June 30, 2021 follows: Long-term Lease Liabilities Balance July 1, 2020, as restated Additions $ 483,378 $ $ 483,378 $ Retirements Balance June 30, 2021, as restated Amounts due within one year - $ 134,278 $ 349,100 $ 135,123 - $ 134,278 $ 349,100 $ 135,123 - 34 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 9 – Long-term Liabilities (continued) The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2022, are as follows: Year ending June 30 2023 2024 2025 2026 2027 Principal $ 150,460 149,882 135,263 141,712 122,328 Interest $ 12,911 10,140 7,202 4,272 1,225 Total $ 163,371 160,022 142,465 145,984 123,553 $ 699,645 $ $ 735,395 35,750 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2021, are as follows: Year ending June 30 2022 2023 2024 Principal $ 135,123 136,945 77,032 Interest $ 557 290 49 Total $ 135,680 137,235 77,081 $ 349,100 $ $ 349,996 896 Note 10 – Commitments and Contingencies Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2023. In Fiscal Year 2022 and 2021, GOCO's expenses on the marketing campaign were approximately $2.1 million and $2.4 million, respectively. The GOCO Board has approved a Fiscal Year 2023 budget of $2.0 million. This contract may be terminated upon advance notice with payment required on any active projects. - 35 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 11 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2022 and 2021, respectively, GOCO recognized pension expense of $12,163 and $5,264, net of forfeitures, which reduced pension expense by $0 and $8,057. GOCO contributed $173,300 and $146,588 to the Pension Plan for the Fiscal Years ended June 30, 2022 and 2021, respectively, which approximates the required contribution. As of June 30, 2022, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. - 36 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 12 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources, and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. Note 13 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 14 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. - 37 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2022 and 2021 Note 15 – Unearned Revenue The balance of Unearned Grant Income of $75,000 as of June 30, 2020, represented a grant from the Boettcher Foundation. The grant agreement specifically outlined a capital project in the Generation Wild program that had to be completed to meet requirements. The contractual requirements of the grant were met as of June 30, 2021, and the grant income was recognized in Fiscal Year 2021. Note 16 – Adoption of New Standard As of July 1, 2020, GOCO implemented GASB 87, Leases. This standard establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. This standard was implemented retroactively as of July 1, 2020, therefore the net position reported in the Statement of Activities was decreased by $4,428 from amounts originally reported for the year ended June 30, 2021. Net position, at June 30, 2021 as previously reported Add right to use leased asset, net of amortization under GASB 87 at June 30, 2021 Add lease liability under GASB 87 at June 30, 2021 Net position, at June 30, 2021 as restated $ 82,300,812 344,672 (349,100) $ 82,296,384 Note 17 – Subsequent Events On September 20, 2022, The Conservation Fund closed on the sale of the Sand Creek Massacre property to the National Park Service to be incorporated into the Sand Creek Massacre National Historic Site. Effective on September 22, 2022, the loan balance of $2,850,000 was paid in full by The Conservation Fund. - 38 - ��REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2022 Original and Final Budget Actual Variance– Favorable (Unfavorable) $ 71,163,020 950,000 $ 73,117,767 (3,932,900) $ 1,954,747 (4,882,900) 72,113,020 69,184,867 (2,928,153) 60,555,990 2,377,278 1,037,905 2,123,109 76,000 68,048,786 2,231,697 3,027,877 718,836 (7,492,796) 145,581 (1,989,972) 2,123,109 (642,836) 66,170,282 74,027,196 (7,856,914) 5,942,738 (4,842,329) (10,785,067) - 715,875 715,875 Net change in fund balance 5,942,738 (4,126,454) (10,069,192) Fund balance – beginning of year 82,218,422 82,218,422 $ 88,161,160 $ 78,091,968 Revenues State lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources - Lease proceeds Fund balance – end of year - 40 - $(10,069,192) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2021 Original and Final Budget Actual Variance– Favorable (Unfavorable) $ 70,267,670 650,000 $ 71,718,841 (892,636) $ 1,451,171 (1,542,636) 70,917,670 70,826,205 (91,465) 60,733,334 1,743,060 929,513 2,500,000 3,000 67,361,617 1,818,140 3,092,342 483,379 (6,628,283) (75,080) (2,162,829) 2,500,000 (480,379) 65,908,907 72,755,478 (6,846,571) 5,008,763 (1,929,273) (6,938,036) - 483,379 483,379 Net change in fund balance 5,008,763 (1,445,894) (6,454,657) Fund balance – beginning of year 83,664,316 83,664,316 $ 88,673,079 $ 82,218,422 Revenues State lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Generation Wild media campaign Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources - Lease proceeds Fund balance – end of year - 41 - $ (6,454,657) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 42 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Denver, Colorado We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated October 24, 2022. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. - 43 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denver, Colorado October 24, 2022 - 44 - �October 24, 2022 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2022 and have issued our report thereon dated October 24, 2022. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated June 23, 2022, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. - 45 - What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Significant Risks Identified As stated in our auditor’s report, professional standards require us to design our audit to provide reasonable assurance that the financial statements are free of material misstatement whether caused by fraud or error. In designing our audit procedures, professional standards require us to evaluate the financial statements and assess the risk that a material misstatement could occur. Areas that are potentially more susceptible to misstatements, and thereby require special audit considerations, are designated as “significant risks”. We have identified the following as significant risks. • • • Management override of controls – Professional standards require auditors to address the possibility of management overriding controls, which is inherent to every entity. Accordingly, we identified as a significant risk that management of the organization may have the ability to override controls that the organization has implemented. Implementation of GASB 87, Leases – There is a risk that right to use assets and corresponding lease liability balances are brought onto the balance sheet for an incorrect amount. Grant expenditures – There is a risk surrounding noncompliance with State statutes in expending grants in accordance with the four funding purposes on a substantially equal basis. As part of this, the risk surrounding improper cutoff of grant expenditures is also present in order to manage results over the four funding purposes. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. The significant accounting policies used by GOCO are described in Note 2 to the financial statements. As described in Note 2, GOCO changed accounting policies related to accounting for leases to adopt the provisions of GASB Statement No. 87, Leases. Accordingly, the accounting change has been retrospectively applied to the financial statements beginning July 1, 2020. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. No such significant accounting estimates were identified. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: - 46 - �The disclosure of Cash Deposits and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, Long-term Liabilities in Note 9, Commitments and Contingencies in Note 10, Related Parties – State Agencies in Note 12, and Unearned Revenue in Note 15. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. The following summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Overstatement of deferred rent liability Overstatement of rent expense $ Debit 57,396 Credit $ 57,396 The effect of this uncorrected misstatement, including the effect of the reversal of prior year uncorrected misstatements as of and for the year ended June 30, 2022, is an understatement of change in fund balance/net position of $57,396, and an understatement of fund balance/net position for the same amount. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. As described in Note 16 to the financial statements, due to the adoption of GASB Statement 87, Leases, GOCO restated opening balances as of July 1, 2021. We have included an emphasis of matter in our report regarding this restatement. - 47 - �Representations Requested from Management We have requested certain written representations from management which are included in the management representation letter dated October 24, 2022. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. This report is intended solely for the information and use of the GOCO Board, management of GOCO, the Legislative Audit Committee, and Office of the State Auditor, and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee, this report is a public document. Denver, Colorado - 48 - �� https://cpw.cvlcollections.org/files/original/42eadf660714fce8d24c26db96345837.pdf 1d35e0ed634fb7e5346fa8a7529118ba PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2021 and 2020 �LEGISLATIVE AUDIT COMMITTEE Representative Dafna Michaelson Jenet – Chair Senator Jim Smallwood – Vice-Chair Representative Rod Bockenfeld Senator Julie Gonzales Representative Colin Larson Representative Dylan Roberts Senator Robert Rodriguez Senator Rob Woodward OFFICE OF THE STATE AUDITOR Kerri L. Hunter State Auditor Marisa Edwards Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 2122F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2021 MEMBERS Mo Siegel – Chair Leticia Martinez Rick Palacio John Montepare David Cockrell Craig Hughes Pamela Denahy Brenda May Mina Liebert Tony Rosendo Patty Imhoff Tom Lee Carrie Curtiss Jahi Simbai Dan Gibbs Charles Garcia Carrie Besnette Hauser �October 6, 2021 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2021 and 2020. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, Eide Bailly LLP What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 6 Independent Auditor’s Report .................................................................................................................. 7 Management’s Discussion and Analysis .................................................................................................. 9 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2021 ................. 15 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2020 ................. 16 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2021............................... 17 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2020............................... 18 Notes to Financial Statements .................................................................................................... 19 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2021 ..................................... 35 Budgetary Comparison Schedule – For the Year Ended June 30, 2020 ..................................... 36 Notes to the Required Supplementary Information .................................................................... 37 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 38 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 40 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2021 and 2020 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2021 and 2020. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from May 2021 through October 2021. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2021 (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated October 6, 2021, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2021 and 2020, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated October 6, 2021, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2020 and no findings and recommendations reported for fiscal year 2021. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2021 and 2020 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2021. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2021 and 2020 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2021 was the twenty-eighth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2021, the State Board that oversees GOCO consists of a total of seventeen members: two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2021, GOCO had a permanent staff of 19 and received $71.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2021. During Fiscal Year 2020, GOCO had a permanent staff of 17 and received $70.4 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2020. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2021 and 2020 As shown in the tables below and on the following page, GOCO complied with the above policy on expended grants as of Fiscal Year 2021. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2025). However, for Fiscal Year 2021, the ratio of grant authorizations for the local government purpose is outside of the 1.25% threshold. GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. In order to comply with policy, the Board passed a resolution on June 14, 2018, to bring local government authorizations back within substantially equal tolerance on authorizations no later than Fiscal Year 2023. This includes reducing local government spending in the Local Government Purpose in GOCO’s 2021 – 2025 spending plan. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2021 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total % Grants Expended Amount % Cumulative Difference $ 350,362 24.7% $ 319,023 24.8% 350,205 24.7 308,209 24.0 41,996 343,851 24.3 323,115 25.1 20,736 372,317 26.3 335,241 26.1 37,076 $ 1,416,735 100.0% $1,285,588 100.0% Source: Data provided by GOCO -4- 31,339 $ 131,147 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2021 and 2020 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2021 FiveYear Change Funding Purpose 2017 Grants Authorized % 2018 2019 2020 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.2% 23.9% 24.5% 24.6% 24.7% 0.5% 23.5 23.4 24.0 24.5 24.7 1.2% 26.0 25.3 24.6 24.3 24.3 (1.7)% 26.3 27.4 26.9 26.6 26.3 0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years 2021 FiveYear Change Funding Purpose 2017 Grants Expended % 2018 2019 2020 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.3% 24.6% 24.4% 24.6% 24.8% (0.5)% 23.0 22.6 22.9 23.8 24.0 1.0% 25.5 26.7 26.1 25.3 25.1 (0.4)% 26.2 26.1 26.6 26.3 26.1 (0.1)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2021 and 2020 There are no findings and recommendations reported for the years ended June 30, 2021 or June 30, 2020. -6- �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2021 and 2020, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -7What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2021 and 2020, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 9 through 14 and 35 through 37 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 6, 2021, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado October 6, 2021 -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2021 and 2020. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 15. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2021, Fiscal Year 2020, and Fiscal Year 2019. 2021 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2020 2019 2021/2020 $ Variance % 2020/2019 $ Variance % $ 71,718,841 $ 70,364,774 $68,494,436 $1,354,067 1.9% $1,870,338 2.7% $67,361,617 $75,040,053 $63,872,334 ($7,678,436) (10.2%) $11,167,719 17.5% 2021 GOCO received its maximum allowable Lottery proceeds for the year of approximately $71.7 million, per the constitutional cap. This represents a $1.4 million increase over Fiscal Year 2020 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures decreased by $7.7 million from Fiscal Year 2020. GOCO’s grant expenditures fluctuate year to year primarily due to when dollars are programmed through the 5-year spending plan and because of timing differences of project completions. The one-time funding of the Fishers Peak State Park near Trinidad in Fiscal Year 2020 led to a particularly large year for grant expenditures, and GOCO did not have any similar one-time expenditures in Fiscal Year 2021. 2020 GOCO received its maximum allowable Lottery proceeds for the year of approximately $70.4 million, per the constitutional cap. This represents a $1.9 million increase over Fiscal Year 2019 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $11.2 million from Fiscal Year 2019. Grant expenditures fluctuate year to year due to timing differences of project completions. In Fiscal Year 2020, GOCO funded the acquisition and development of the new Fishers Peak State Park near Trinidad, Colorado through -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 Financial Highlights (continued) Colorado Parks and Wildlife, which increased expenditures from Fiscal Year 2019. Wildlife expenditures also increased due to an increase in the completion of capital projects. Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($71.7 million and $70.4 million in Fiscal Year 2021 and Fiscal Year 2020, respectively). Any remaining net Lottery proceeds in excess of the cap were distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2020 and Fiscal Year 2021. In Fiscal Year 2021, in addition to the Public School Capital Construction Assistance Fund, excess funds were also distributed to the Outdoor Equity Fund, the Wildlife Cash Fund, and the Parks and Outdoor Rec Fund. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2021, 2020, and 2019. 2021 98,046,093 82,390 98,128,483 June 30, 2020 $ 103,699,911 98,037 103,797,948 2019 $ 102,293,049 84,573 102,377,622 Liabilities 15,827,671 20,035,595 13,426,075 Net position Invested in capital assets Unrestricted Total net position 82,390 82,218,422 82,300,812 98,037 83,664,316 83,762,353 84,573 88,866,974 88,951,547 Current and other assets Capital assets, net Total assets $ $ - 10 - $ $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 Government-Wide Statements (continued) 2021 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash increased by approximately $5.5 million during Fiscal Year 2021 due to the timing of Lottery proceeds received and a decrease in operating costs and grants paid out. The Lottery proceeds receivable decreased by approximately $11.7 million from June 30, 2020. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2020, the constitutional cap was met later in the year, therefore the amount due from Lottery was higher at the end of Fiscal Year 2020 than Fiscal Year 2021. Advanced grants payments were made during the year to grantees primarily for projects awarded under GOCO’s Generation Wild, Resilient Communities, and Habitat Restoration programs. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2021, liabilities decreased by $4.2 million from June 30, 2020. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April through June 2021 investments of approximately $13.9 million, a decrease over the prior year. Accounts payable and compensated absences also had significant decreases due to timing of monthly bills. 2020 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash decreased by approximately $20.8 million during Fiscal Year 2020 due to the timing of grant payments and an increase in grants and loans paid out. The Lottery proceeds receivable increased by approximately $15 million from June 30, 2019. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2019, the constitutional cap was met earlier in the year, therefore the amount due from Lottery was lower at the end of Fiscal Year 2019 than Fiscal Year 2020. Notes receivable increased due to a loan that was paid to The Conservation Fund (“TCF”) at the end of June 2020 in the amount of $6.25 million for the acquisition of the Sweetwater Lake property. (See Note 6 for additional detail.) Advanced grants payments were made during the year to grantees of GOCO’s Generation Wild (formerly “Inspire”) program, a grant program funding 15 community coalitions that provide programs, infrastructure, and career pathways within the community in order to address the growing disconnect between youth and the outdoors. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2020, liabilities increased by $6.6 million from June 30, 2019. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated March through June 2020 investments of approximately $17.2 million, an increase over the prior year. Accounts payable and compensated absences also had slight increases. - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 Government-Wide Statements (continued) Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2021, 2020 and 2019. Lottery revenue Miscellaneous/Grant income and investment earnings (loss) Total revenue Fiscal Years Ended June 30, 2021 2020 $ 71,718,841 $ 70,364,774 $ Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses Special Item Grant Reimbursements 2019 68,494,436 (892,636) 70,826,205 4,682,224 75,046,998 5,729,474 74,223,910 67,361,617 1,818,140 3,107,989 72,287,746 75,040,053 1,724,618 3,471,521 80,236,192 63,872,334 1,656,529 3,421,409 68,950,272 - - 18,815 Change in net position (1,461,541) (5,189,194) 5,292,453 Beginning net position 83,762,353 88,951,547 83,659,094 Ending net position $ 82,300,812 $ 83,762,353 $ 88,951,547 2021 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2021 decreased by $5.6 million. The decrease is in part due to the fact that GOCO is no longer recognizing grant income from the Colorado Health Foundation, as the final installment of $1 million was recognized during Fiscal Year 2020. Additionally, GOCO’s investments held by the State Treasury experienced a decrease in the unrealized gain on investments of $1.8 million and a decrease in earned interest income of approximately $1 million, for a total decrease of $4.6 million from Fiscal Year 2020. Grant expenditures in Fiscal Year 2021 decreased by $7.7 million from Fiscal Year 2020. This decrease was anticipated as significant capital and land acquisition projects were completed during Fiscal Year 2020 in the outdoor recreation and wildlife purposes – especially the acquisition and development of the new Fishers Peak State Park near Trinidad. GOCO’s operating expenditures decreased from Fiscal Year 2020 primarily due to lack of travel, meetings, and office expenses related to COVID-19 impacts experienced during Fiscal Year 2021. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 Government-Wide Statements (continued) 2020 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2020 decreased by $1 million. The decrease is due to a decrease in the revenue recognized of previously unearned grant income from a Colorado Health Foundation grant of $2.4 million in Fiscal Year 2019 to $1 million in Fiscal Year 2020. Additionally, GOCO’s investments held by the State Treasury experienced an increase in the unrealized gain on investments of $1.9 million and earned interest income of approximately $1.8 million. Grant expenditures in Fiscal Year 2020 increased by $11.2 million from Fiscal Year 2019 primarily due to an increase in completion of CPW projects. GOCO funded $9.75 million in the outdoor recreation purpose for a significant land acquisition that was made near Trinidad, Colorado, where CPW will establish Fishers Peak State Park near Trinidad. Additionally, wildlife purpose funding was used by CPW to complete several priority capital projects during the Fiscal Year. GOCO’s operating expenditures increased from prior year due to inflation and a project to develop and implement a multi-year strategic plan for Fiscal Years 2021 - 2025. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $71.2 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2022. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to be consistent or slightly lower in the next year as the new 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2023 – 2025). As GOCO enters the second year of its current 5-year spending plan, focus will continue to be on the Generation Wild, Youth Corps, RESTORE, and Fellowship programs. Fiscal Year 2022 also marks the inaugural year for funding GOCO’s new program portfolio under the 2020 strategic plan, which includes the Centennial, Community Impact, Land Acquisition, Planning and Capacity, and Stewardship Impact programs. As noted above, the current 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2023 – 2025) in order to identify and prepare large impactful projects for the new Centennial Program. The Centennial Program is GOCO’s strategic initiative aimed at encouraging multi-purpose, transformational projects. Priority will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (article XXVII). - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2021 and 2020 Economic Factors and Next Year’s Budget (continued) Also, GOCO is budgeting $5.6 million for Fiscal Year 2022 operating expenditures. The increase from the prior year is primarily due to the addition of regional program staff. Part of GOCO’s new strategic plan implementation includes expanding program staff into different areas of Colorado to work collaboratively with grantees and partners. As a result, five new full-time employee positions were created and filled by late June 2021. Operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Capital outlay $ 2,337,277 3,265,015 12,000 Total 2022 Budgeted Operating Expenditures $ 5,614,292 - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2021 Adjustments (Note 3) Statement of Net Position $ 82,390 $ 82,505,367 6,764,369 6,250,000 2,406,877 102,017 17,463 82,390 98,046,093 82,390 98,128,483 Grants payable Accounts payable Compensated absences payable 15,488,193 241,760 97,718 - 15,488,193 241,760 97,718 Total liabilities 15,827,671 - 15,827,671 102,017 82,116,405 82,218,422 (102,017) (82,116,405) (82,218,422) - 82,390 82,218,422 82,390 82,218,422 $ 82,300,812 $ 82,300,812 General Fund Assets Cash and investments Lottery proceeds receivable Note Receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 82,505,367 6,764,369 6,250,000 2,406,877 102,017 17,463 - Total assets Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 98,046,093 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2020 General Fund Adjustments (Note 3) Statement of Net Position $ 98,037 $ 76,970,134 18,476,420 6,250,000 1,907,698 76,803 18,856 98,037 Assets Cash and investments Lottery proceeds receivable Note Receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 76,970,134 18,476,420 6,250,000 1,907,698 76,803 18,856 - Total assets 103,699,911 98,037 103,797,948 Grants payable Accounts payable Compensated absences payable Unearned Grant Income 19,398,335 458,144 104,116 75,000 - 19,398,335 458,144 104,116 75,000 Total liabilities 20,035,595 - 20,035,595 76,803 83,587,513 83,664,316 (76,803) (83,587,513) (83,664,316) - 98,037 83,664,316 98,037 83,664,316 $ 83,762,353 $ 83,762,353 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 103,699,911 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2021 Adjustments (Note 3) Statement of Activities $ 15,647 15,647 $ 67,361,617 1,818,140 3,107,989 72,287,746 71,718,841 - 71,718,841 Net program revenues (expenses) (553,258) (15,467) (568,905) General revenues Grant and miscellaneous income Investment income (loss) Total general revenues 80,196 (972,832) (892,636) - 80,196 (972,832) (892,636) Excess (deficiency) of revenues over expenditures (1,445,894) (15,647) (1,461,541) Change in fund balance (1,445,894) 1,445,894 - Change in net position - (1,461,541) (1,461,541) Fund balance/net position – beginning of the year 83,664,316 98,037 83,762,353 Fund balance/net position – end of the year $ 82,218,422 82,390 $ 82,300,812 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Total expenditures/expenses $ 67,361,617 1,818,140 3,092,342 72,272,099 Program revenues – State Lottery proceeds See Notes to the Financial Statements - 17 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2020 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital Outlay Total expenditures/expenses $ 75,040,053 1,724,618 3,454,499 30,486 80,249,656 Adjustments (Note 3) Statement of Activities $ 17,022 (30,486) (13,464) $ 75,040,053 1,724,618 3,471,521 80,236,192 Program revenues – State Lottery proceeds 70,364,774 - 70,364,774 Net program revenues (expenses) (9,884,882) 13,464 (9,871,418) General revenues Grant income Investment earnings Total general revenues 1,000,572 3,681,652 4,682,224 - 1,000,572 3,681,652 4,682,224 Excess (deficiency) of revenues over expenditures (5,202,658) 13,464 (5,189,194) Change in fund balance (5,202,658) 5,202,658 - Change in net position - (5,189,194) (5,189,194) Fund balance/net position – beginning of the year 88,866,974 84,573 88,951,547 Fund balance/net position – end of the year $ 83,664,316 98,037 $ 83,762,353 $ See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 2 - Summary of Significant Accounting Policies (continued) Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures as of June 30, 2021 and June 30, 2020. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Furniture and fixtures Computer hardware and software Equipment Years 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements as the following conditions of GASB 16, Accounting for Compensated Absences, have been met: 1. The employees' rights to receive compensation are attributable to services already rendered and; 2. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. GASB Interpretation No. 6 requires leave balances that will be liquidated with expendable available financial resources (current liabilities) be accrued and reported as a governmental fund liability and expenditure. GOCO budgeted for compensated absences in the current year with current financial - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 2 - Summary of Significant Accounting Policies (continued) resources. Therefore, the full liability was accrued and reported in the Government-wide and fund financial statements. Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance recorded in the General Fund on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2021 and 2020 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2021 and 2020 was approximately $71.7 million and $70.4 million, respectively, which was the maximum amount allowable under the State Constitution. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $82,390 and $98,037 adjustments to capital assets as of June 30, 2021 and 2020, respectively, represent the capital assets of GOCO, net of accumulated depreciation. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2021 2020 Capital outlay Depreciation expense Net adjustment to increase (decrease) net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities - 23 - $ 15,647 $ (30,486) 17,022 $ 15,647 $ (13,464) �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2021, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2021 Carrying Balance Bank Balance Cash on hand Insured deposits $ 504,467 $ 197 391,826 $ 504,467 $ 392,023 As of June 30, 2020, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2020 Carrying Balance Bank Balance Cash on hand Insured deposits $ 170,767 $ 361 118,467 $ 170,767 $ 118,828 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 4 - Cash Deposits and Investments (continued) • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2021, GOCO had cash invested with the State Treasurer of $82,113,344 which represented approximately 0.46 percent of the total $17,699.3 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2020, GOCO had cash invested with the State Treasurer of $76,851,306 which represented approximately 0.82 percent of the total $9,358.1 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pool, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Comprehensive Annual Financial Report for the year ended June 30, 2021. Summary Total cash deposits and investments are as follows: June 30, 2021 Cash deposits Investments $ 392,023 82,113,344 $ 82,505,367 - 25 - 2020 $ 118,828 76,851,306 $ 76,970,134 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 4 - Cash Deposits and Investments (continued) Investment Earnings Investment earnings are composed of the following: June 30, 2021 Investment income Adjustment for unrealized gain (loss) on investments held by the State $ 846,043 2020 $ (1,818,875) $ (972,832) 1,818,360 1,863,292 $ 3,681,652 Note 5 - Lottery Proceeds Receivable As of June 30, 2021, and 2020, GOCO had distributions owed from the Lottery amounting to $6,764,369 and $18,476,420, respectively. For the receivable as of June 30, 2021, this represents GOCO’s allocation of net proceeds from the Lottery for April 2021, the month in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2020, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April through June 2020. These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On June 30, 2020, GOCO entered into a zero-interest promissory note with The Conservation Fund, (“TCF”) in the amount of $6,250,000 for the acquisition of the Sweetwater Lake parcel for inclusion into the White River National Forest. Per the loan agreement, the loan is due on June 30, 2023 and is interestfree through June 30, 2022, after which time the interest rate will equal the Colorado Treasury Pool rate of interest. TCF acquired the property in June 2020 to hold until it can be sold to the United States Forest Service (“USFS”) when funds get appropriated from the Land and Water Conservation Fund. On August 31, 2021, the Sweetwater Lake parcel was sold to the USFS, and the loan balance was paid in full on September 2, 2021. During Fiscal Years 2021 and 2020, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered a contingency eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds may not be expensed by GOCO until the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $2,406,877 at June 30, 2021 and $1,907,698 at June 30, 2020. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2021 follows: Balance at June 30, 2020 Equipment Software Furniture Intangible Assets Leasehold improvements $ Less: accumulated depreciation Total capital assets, net 76,617 125,052 38,850 32,416 22,164 295,099 Additions $ (197,062) $ 98,037 - $ (15,647) $ Balance at June 30, 2021 Retirements (15,647) - $ $ - 76,617 125,052 38,850 32,416 22,164 295,099 (212,709) $ 82,390 An analysis of the changes in capital assets for the year ended June 30, 2020 follows: Balance at June 30, 2019 Equipment Software Furniture Intangible Assets Leasehold improvements $ Less: accumulated depreciation Total capital assets, net 46,131 125,052 38,850 32,416 22,164 264,613 Additions $ (180,040) $ 84,573 - 27 - 30,486 30,486 $ (17,022) $ 13,464 Balance at June 30, 2020 Retirements - $ $ - 76,617 125,052 38,850 32,416 22,164 295,099 (197,062) $ 98,037 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2021 and 2020. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2020 Transfers/ Additions $ 336,041,532 $ 14,409,923 334,485,291 Transfers/ Deletions (89,791) $ 350,361,664 16,073,269 (353,137) 350,205,423 331,741,232 12,126,662 (17,041) 343,850,853 364,416,454 8,274,840 (374,496) 372,316,798 $1,366,684,509 $ 50,884,694 (834,465) $ 1,416,734,738 Cumulative Authorized Grants at June 30, 2019 Transfers/ Additions $ 318,473,760 $ 20,189,089 312,264,030 $ Cumulative Authorized Grants at June 30, 2021 $ Transfers/ Deletions (2,621,317) $ 336,041,532 27,376,477 (5,155,216) 334,485,291 320,454,730 14,578,775 (3,292,273) 331,741,232 349,064,331 15,659,300 (307,177) 364,416,454 $ 1,300,256,851 $ 77,803,641 (11,375,983) $ 1,366,684,509 - 28 - $ Cumulative Authorized Grants at June 30, 2020 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2020 Transfers/ Additions Cumulative Expended Grants at June 30, 2021 $ 299,571,371 $ 19,451,568 $ 319,022,940 289,965,211 18,243,968 308,209,179 308,389,052 14,725,858 323,114,910 320,300,336 14,940,223 335,240,560 $ 1,218,225,970 $ 67,361,617 $ 1,285,587,589 Cumulative Expended Grants at June 30, 2019 Transfers/ Additions Cumulative Expended Grants at June 30, 2020 $ 278,778,598 $ 20,792,773 $ 299,571,371 261,906,167 28,059,044 289,965,211 298,068,407 10,320,645 308,389,052 304,432,745 15,867,591 320,300,336 $ 1,143,185,917 $ 75,040,053 $ 1,218,225,970 - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in January 2024, April 2022, September 2023, and October 2021, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2021 and 2020 was $128,611 and $127,672, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2022 2023 2024 $ 137,354 137,238 78,253 Total $ 352,845 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2022. In Fiscal Year 2021 and 2020, GOCO's expenses on the marketing campaign were approximately $2.37 million and $2.37 million, respectively. The GOCO Board has approved a Fiscal Year 2022 budget of $2.1 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross - 30 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 10 - Pension Plans (continued) salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2021 and 2020, respectively, GOCO recognized pension expense of $5,264 and $8,662, net of forfeitures, which reduced pension expense by $8,057 and $5,123. GOCO contributed $146,588 and $135,875 to the Pension Plan for the Fiscal Years ended June 30, 2021 and 2020, respectively, which approximates the required contribution. As of June 30, 2021, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 14 – Unearned Revenue The balance of Unearned Grant Income of $75,000 as of June 30, 2020, represented a grant from the Boettcher Foundation. The grant agreement specifically outlined a capital project in the Generation Wild program that had to be completed to meet requirements. The contractual requirements of the grant were met as of June 30, 2021, and the grant income was recognized in Fiscal Year 2021. In Fiscal Year 2017, GOCO and the Colorado Health Foundation entered into a grant agreement which allocated $4 million to GOCO over a 4-year period, contingent on meeting certain requirements. These funds were monitored by the Colorado Health Foundation and could only be used for GOCO’s Generation Wild (Formerly “Inspire”) initiative on projects approved by the Colorado Health Foundation. GOCO had received the full $4 million of the grant in advances which provided approximately $1 million each year from Fiscal Year 2017 to 2020. GOCO subsequently awarded the funds to Generation Wild grantees. The proceeds were initially classified as “Unearned Revenue” until the corresponding grant expense was incurred for the qualifying grants. The full grant amount has been distributed and used by Generation Wild grantees as of June 30, 2020, and the corresponding revenue reported as grant income as of June 30, 2020. - 32 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2021 and 2020 Note 15 – Subsequent Events On September 24, 2021, the Board approved a resolution authorizing an interest-free loan for $2,850,000 to The Conservation Fund to purchase property located on the Sand Creek Massacre National Historic Site for a term of two years, with an optional third year at Treasury rate of interest. The loan is expected to be finalized in October 2021. The property will ultimately be transferred to the National Park Service and incorporated into the National Historic Site. - 33 - �REQUIRED SUPPLEMENTARY INFORMATION �Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2021 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 70,267,670 $ 71,718,841 650,000 70,917,670 (892,636) 70,826,205 (1,542,636) (91,465) Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 60,733,334 1,743,060 3,429,513 3,000 65,908,907 67,361,617 1,818,140 3,092,342 72,272,099 (6,628,283) (75,080) 337,171 3,000 (6,363,192) (Deficiency) excess of revenues over expenditures 5,008,763 (1,445,894) (6,454,657) Fund balance – beginning of year 39,308,576 83,664,316 44,355,740 $ 44,317,339 $ 82,218,422 $ 37,901,083 Revenues State Lottery proceeds Investment earnings/(loss) and miscellaneous income Total revenues Fund balance – end of year - 35 - $ 1,451,171 �Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2020 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 68,441,881 $ 70,364,774 1,500,000 69,941,881 4,682,224 75,046,998 3,182,224 5,105,117 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 65,770,750 1,793,169 3,677,524 3,000 71,244,443 75,040,053 1,724,618 3,454,499 30,486 80,249,656 (9,269,303) 68,551 223,025 (27,486) (9,005,213) (Deficiency) excess of revenues over expenditures (1,302,562) (5,202,658) (3,900,096) Fund balance – beginning of year 40,611,138 88,866,974 48,255,836 $ 39,308,576 $ 83,664,316 $ 44,355,740 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 36 - $ 1,922,893 �Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 37 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2021 and 2020, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated October 6, 2021. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 38 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. October 6, 2021 Denver, Colorado - 39 - �October 6, 2021 To the Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2021 and have issued our report thereon dated October 6, 2021. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated June 28, 2021, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. - 40 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during fiscal year 2021. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. No such significant accounting estimates were identified. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: The disclosure of Cash Deposits and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, Commitments and Contingencies in Note 9, Related Parties – State Agencies in Note 11, and Unearned Revenue in Note 14. The financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. There were no uncorrected or corrected misstatements identified as a result of our audit procedures. - 41 - �Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management that are included in the management representation letter dated October 6, 2021. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. This report is intended solely for the information and use of the GOCO Board, management of GOCO, the Legislative Audit Committee, and Office of the State Auditor, and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee, this report is a public document. Denver, Colorado - 42 - � https://cpw.cvlcollections.org/files/original/7e18d1f5b9acaad20ab99376bdcc70ba.pdf a66a0c88609a9d0495241fafd7f4f205 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2020 and 2019 �LEGISLATIVE AUDIT COMMITTEE Representative Lori Saine – Chair Representative Dafna Michaelson Jenet – Vice-Chair Representative Rod Bockenfeld Senator Rhonda Fields Representative Tracy Kraft-Tharp Senator Paul Lundeen Senator Robert Rodriguez Senator Jim Smallwood OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 2022F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2020 MEMBERS Hollie Velasquez-Horvath– Chair Jason Brinkley David Cockrell Warren Dean Pamela Denahy Charles Garcia Dan Gibbs Karma Giulianelli Carrie Besnette Hauser Mina Liebert Leticia Martinez Turk Montepare Jody Rogers Mo Siegel Jahi Simbai Linda Strand Julie Thibodeau �November 3, 2020 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2020 and 2019. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, Eide Bailly LLP What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 6 Independent Auditor’s Report .................................................................................................................. 7 Management’s Discussion and Analysis .................................................................................................. 9 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2020 ................. 15 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2019 ................. 16 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2020 ............................... 17 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2019 ............................... 18 Notes to Financial Statements .................................................................................................... 19 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2020 ..................................... 35 Budgetary Comparison Schedule – For the Year Ended June 30, 2019 ..................................... 36 Notes to the Required Supplementary Information .................................................................... 37 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 38 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 40 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2020 and 2019 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2020 and 2019. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from May 2020 through October 2020. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2020 (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated November 3, 2020, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2020 and 2019, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated November 3, 2020, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2019 and no findings and recommendations reported for fiscal year 2020. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2020 and 2019 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2020. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2020 and 2019 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2020 was the twenty-seventh year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2020, the State Board that oversees GOCO consists of a total of seventeen members: two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2020, GOCO had a permanent staff of 17 and received $70.4 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2020. During Fiscal Year 2019, GOCO had a permanent staff of 17 and received $68.5 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2019. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. GOCO created a policy in Fiscal Year 2018 to define “substantially equal” and “a period of years,” to measure performance and establish a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among four categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2020 and 2019 As shown in the tables below and on the following page, GOCO complied with the above policy on expended grants as of Fiscal Year 2020. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2020). However, the ratio of grant authorizations for the Local Government Purpose is outside of the 1.25% threshold at 2020. GOCO’s policy for board action if the defined threshold for substantially equal is out of compliance is as follows: a. determine what circumstances are affecting its ability to maintain its cash balance as a percentage of outstanding grants, grant authorizations, or grant expenditures within established ranges; and, b. determine what actions it will take to bring cash balance, grant authorizations or grant expenditures within established ranges; and, c. determine a timeframe by which it will seek to return its cash balance as a percentage of outstanding grants, grant authorizations or grant expenditures back within established ranges. In order to comply with policy, the Board passed a resolution on June 14, 2018 to bring local government authorizations back within substantially equal tolerance on authorizations no later than Fiscal Year 2023. This includes reducing local government spending in the Local Government Purpose in GOCO’s 2021 – 2025 spending plan. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2020 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total $ 1,366,685 % Grants Expended Amount % Cumulative Difference $ 336,042 24.6% $ 299,572 24.6% 334,485 24.5 289,965 23.8 44,520 331,741 24.3 308,389 25.3 23,352 364,417 26.6 320,300 26.3 44,117 100.0% $1,218,226 100.0% Source: Data provided by GOCO -4- 36,470 $ 148,459 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2020 and 2019 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2020 FiveYear Change Funding Purpose 2016 Grants Authorized % 2017 2018 2019 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.6% 24.2% 23.9% 24.5% 24.6% 0% 23.7 23.5 23.4 24.0 24.5 0.8% 26.0 26.0 25.3 24.6 24.3 (1.7)% 25.7 26.3 27.4 26.9 26.6 0.9% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years 2020 FiveYear Change Funding Purpose 2016 Grants Expended % 2017 2018 2019 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.4% 25.3% 24.6% 24.4% 24.6% (0.8)% 22.9 23.0 22.6 22.9 23.8 0.9% 25.7 25.5 26.7 26.1 25.3 (0.4)% 26.0 26.2 26.1 26.6 26.3 0.3% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2020 and 2019 There are no findings and recommendations reported for the years ended June 30, 2020 or June 30, 2019. -6- �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2020 and 2019, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -7What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2020 and 2019, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 9 through 14 and 35 through 37 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 3, 2020, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado November 3, 2020 -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2020 and 2019. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 15. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2020, Fiscal Year 2019, and Fiscal Year 2018. Fiscal Year Ended June 30, 2020 2019 2018 Lottery revenues Grant expenditures 2020/2019 $ Variance % 2019/2018 $ Variance % $ 70,364,774 $68,494,436 $66,250,998 $1,870,338 2.7% $2,243,438 3.4% $75,040,053 $63,872,334 $66,377,373 $11,167,719 17.5% $(2,505,039) (3.8%) 2020 GOCO received its maximum allowable Lottery proceeds for the year of approximately $70.4 million, per the constitutional cap. This represents a $1.9 million increase over Fiscal Year 2019 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $11.2 million from Fiscal Year 2019. Grant expenditures fluctuate year to year due to timing differences of project completions. In Fiscal Year 2020, GOCO funded the acquisition and development of the new Fishers Peak State Park near Trinidad, Colorado through Colorado Parks and Wildlife, which increased expenditures from Fiscal Year 2019. Wildlife expenditures also increased due to an increase in the completion of capital projects. 2019 GOCO received its maximum allowable Lottery proceeds for the year of approximately $68.5 million, per the constitutional cap. This represents a $2.2 million increase over Fiscal Year 2018 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures decreased by $2.5 million from Fiscal Year 2018. Grant expenditures fluctuate year -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 to year due to timing differences of project completions. In Fiscal Year 2018, GOCO’s open space competitive program had a high amount of grant reimbursements, which decreased in Fiscal Year 2019. Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($70.4 million and $68.5 million in Fiscal Year 2020 and Fiscal Year 2019, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2020 and Fiscal Year 2019. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2020, 2019, and 2018. 2020 June 30, 2019 2018 $ 103,699,911 98,037 103,797,948 $ 102,293,049 84,573 102,377,622 $ 94,091,500 105,292 94,196,792 Liabilities 20,035,595 13,426,075 10,537,698 Net position Invested in capital assets Unrestricted 98,037 83,664,316 84,573 88,866,974 105,292 83,553,802 $ 83,762,353 $ 88,951,547 $ 83,659,094 Current and other assets Capital assets, net Total assets Total net position - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 Government-Wide Statements (continued) 2020 The significant portions of current and other assets are cash, Lottery proceeds receivable, notes receivable and advanced grants payments. Cash decreased by approximately $20.8 million during Fiscal Year 2020 due to the timing of grant payments and an increase in grants and loans paid out. The Lottery proceeds receivable increased by approximately $15 million from June 30, 2019. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. In Fiscal Year 2019, the constitutional cap was met earlier in the year, therefore the amount due from Lottery was lower at the end of Fiscal Year 2019 than Fiscal Year 2020. Notes receivable increased due to a loan that was paid to The Conservation Fund (“TCF”) at the end of June 2020 in the amount of $6.25 million for the acquisition of the Sweetwater Lake property. (See Note 6 for additional detail.) Advanced grants payments were made during the year to grantees of GOCO’s Generation Wild (formerly “Inspire”) program, a grant program funding 15 community coalitions that provide programs, infrastructure, and career pathways within the community in order to address the growing disconnect between youth and the outdoors. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2020, liabilities increased by $6.6 million from June 30, 2019. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated March through June 2020 investments of approximately $17.2 million, an increase over the prior year. Accounts payable and compensated absences also had slight increases. 2019 The significant portions of current and other assets are cash, Lottery proceeds receivable and advanced grants payments. Cash increased by approximately $17.8 million during Fiscal Year 2019 due to an unrealized gain on GOCO’s state treasury account and the timing of grant payments. Lottery proceeds receivable decreased by approximately $7.6 million from June 30, 2018. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. Higher proceeds from Lottery in the beginning of the year reduce the receivable at the end of the year. Advanced grants payments were made during the year to grantees of GOCO’s Generation Wild (formerly “Inspire”) program, a grant program funding 15 community coalitions that provide programs, infrastructure, and career pathways within the community in order to address the growing disconnect between youth and the outdoors. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2019, liabilities increased by $2.9 million from June 30, 2018. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April, May and June 2019 investments of approximately $12.3 million, an increase over prior year. Unearned Grant Income decreased due to the recognition of grant funds from a $4 million grant from the Colorado Health Foundation as grant income in Fiscal Year 2019, after requirements were met during the year. $3 million of this grant has been received as of June 30, 2019 and the entire amount has been recognized as grant income during Fiscal Years 2018 and 2019. The balance of Unearned Grant - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 Government-Wide Statements (continued) Income of $75,000 represents a grant from the Boettcher Foundation that has been received but the contractual requirements of the grant have not yet been met. Please see Note 14 for further explanation. Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2020, 2019, and 2018. Fiscal Years Ended June 30, 2020 2019 2018 Revenue Lottery revenue $ 70,364,774 $ 68,494,436 $ 66,250,998 Miscellaneous/Grant income and investment earnings 4,682,224 5,729,474 914,078 Total revenue 75,046,998 74,223,910 67,165,076 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 75,040,053 1,724,618 3,471,521 80,236,192 63,872,334 1,656,529 3,421,409 68,950,272 66,377,373 1,574,344 2,940,383 70,892,100 - 18,815 2,266,019 Change in net position (5,189,194) 5,292,453 (1,461,005) Beginning net position 88,951,547 83,659,094 85,120,099 Ending net position $ 83,762,353 $ 88,951,547 $ 83,659,094 Special Item Grant Reimbursements 2020 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2020 decreased by $1 million. The decrease is due to a decrease in the revenue recognized of previously unearned grant income from a Colorado Health Foundation grant of $2.4 million in Fiscal Year 2019 to $1 million in Fiscal Year 2020. Additionally, GOCO’s investments held by the State Treasury experienced an unrealized gain of $1.9 million and earned interest income of approximately $1.8 million. Grant expenditures in Fiscal Year 2020 increased by $11.2 million from Fiscal Year 2019 primarily due to an increase in completion of CPW projects. GOCO funded $9.75 million in the outdoor recreation purpose for a significant land acquisition that was made near Trinidad, Colorado, where CPW will establish Fishers Peak State Park. Additionally, wildlife purpose funding was used by CPW to complete several priority capital projects during the Fiscal Year. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 Government-Wide Statements (continued) GOCO’s operating expenditures increased from prior year due to inflation and a project to develop and implement a multi-year strategic plan for Fiscal Years 2021 - 2025. 2019 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2019 increased by $4.8 million. The increase is due to the revenue recognition of previously unearned grant income of $2.4 million received from a Colorado Health Foundation grant. Additionally, GOCO’s investments held by the State Treasury experienced an unrealized gain of $1.4 million and earned interest income of approximately $1.8 million. Grant expenditures in Fiscal Year 2019 decreased by $2.5 million from Fiscal Year 2018 primarily due to a decrease in project completions of open space grant programs. Grant expenditures are made on a reimbursement basis. Fiscal Year 2018 and 2019 awards were lower than the first two years of GOCO’s 2016-2020 Spending Plan, resulting in lower grant payments in 2019. Operating expenditures increased from prior year due to inflation, a project to implement a multi-year strategic plan and the increase in budget for the Generation Wild marketing campaign designed to get Colorado kids and their families outside more often. During 2019, GOCO received one reimbursement from the proceeds of a land sale from a grantee in the amount of $18,815, as stipulated in their grant agreement. This transaction was considered infrequent and unusual in nature and was classified as a Special Item. In 2018, a similar land sale transaction occurred for $2.3 million, causing a decrease in Special Items. See Note 15 for more detail. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $70.3 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2021. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to be consistent or slightly lower in the next year as grants awarded in the 2015 – 2020 spending plan are paid out to grantees. As GOCO begins a new 5-year strategic funding plan in Fiscal Year 2021, focus will initially be on helping the outdoors community respond to challenges of COVID-19 impacts with our Resilient Communities Program. This new program was created in June of 2020 in response to the disruption caused by the COVID-19 pandemic. Through the Resilient Communities Program, GOCO will fund its partners’ one-time, immediate needs or opportunities that have emerged from the pandemic that also align with GOCO’s program values and are within GOCO’s constitutional funding mandates. The new 5-year spending plan is structured to award higher funds in the later years of the plan (Fiscal Years 2023 – 2025) in order to identify and prepare large impactful projects for the new Centennial Program. The Centennial Program is GOCO’s strategic initiative aimed at encouraging multi-purpose, transformational projects. Priority will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (article XXVII). - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2020 and 2019 Economic Factors and Next Year’s Budget (continued) Also, GOCO is budgeting $5.2 million for Fiscal Year 2021 operating expenditures. The decrease from prior year is due to a decrease in costs on strategic planning and a temporary salary and bonus freeze. Operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Capital outlay $ 1,743,060 3,429,513 3,000 Total 2021 Budgeted Operating Expenditures $ 5,175,573 - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2020 General Fund Adjustments (Note 3) Statement of Net Position $ 98,037 $ 76,970,134 18,476,420 6,250,000 1,907,698 76,803 18,856 98,037 Assets Cash and investments Lottery proceeds receivable Note Receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 76,970,134 18,476,420 6,250,000 1,907,698 76,803 18,856 - Total assets 103,699,911 98,037 103,797,948 Grants payable Accounts payable Compensated absences payable Unearned Grant Income 19,398,335 458,144 104,116 75,000 - 19,398,335 458,144 104,116 75,000 Total liabilities 20,035,595 - 20,035,595 76,803 83,587,513 83,664,316 (76,803) (83,587,513) (83,664,316) - 98,037 83,664,316 98,037 83,664,316 $ 83,762,353 $ 83,762,353 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 103,699,911 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2019 General Fund Adjustments (Note 3) Statement of Net Position $ 84,573 $ 97,770,657 3,492,985 909,642 101,852 17,913 84,573 Assets Cash and investments Lottery proceeds receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 97,770,657 3,492,985 909,642 101,852 17,913 - Total assets 102,293,049 84,573 102,377,622 Grants payable Accounts payable Compensated absences payable Unearned Grant Income 12,915,657 377,419 57,999 75,000 - 12,915,657 377,419 57,999 75,000 Total liabilities 13,426,075 - 13,426,075 101,852 88,765,122 88,866,974 (101,852) (88,765,122) (88,866,974) - 84,573 88,866,974 84,573 88,866,974 $ 88,951,547 $ 88,951,547 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 102,293,049 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2020 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital Outlay Total expenditures/expenses $ 75,040,053 1,724,618 3,454,499 30,486 80,249,656 Adjustments (Note 3) $ Statement of Activities 17,022 (30,486) (13,464) $ 75,040,053 1,724,618 3,471,521 80,236,192 Program revenues – State Lottery proceeds 70,364,774 - 70,364,774 Net program revenues (expenses) (9,884,882) 13,464 (9,871,418) General revenues Grant income Investment earnings Total general revenues 1,000,572 3,681,652 4,682,224 - 1,000,572 3,681,652 4,682,224 Excess (deficiency) of revenues over expenditures (5,202,658) 13,464 (5,189,194) Change in fund balance (5,202,658) 5,202,658 - Change in net position - (5,189,194) (5,189,194) Fund balance/net position – beginning of the year 88,866,974 84,573 88,951,547 Fund balance/net position – end of the year $ 83,664,316 98,037 $ 83,762,353 $ See Notes to the Financial Statements - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2019 Adjustments (Note 3) Statement of Activities $ 20,719 20,719 $ 63,872,334 1,656,529 3,421,409 68,950,272 68,494,436 - 68,494,436 Net program revenues (expenses) (435,117) - (455,836) General revenues Grant income Investment earnings Total general revenues 2,435,006 3,294,468 5,729,474 - 2,435,006 3,294,468 5,729,474 Excess (deficiency) of revenues over expenditures 5,294,357 (20,719) 5,273,638 Special item Project reimbursements 18,815 - 18,815 Change in fund balance 5,313,172 (5,313,172) - Change in net position - 5,292,453 5,292,453 Fund balance/net position – beginning of the year 83,553,802 105,292 83,659,094 Fund balance/net position – end of the year $ 88,866,974 84,573 $ 88,951,547 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Total expenditures/expenses $ 63,872,334 1,656,529 3,400,690 68,929,553 Program revenues – State Lottery proceeds $ See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 2 - Summary of Significant Accounting Policies (continued) Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant expenditures as of June 30, 2020. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Furniture and fixtures Computer hardware and software Equipment Years 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements as the following conditions of GASB 16, Accounting for Compensated Absences, have been met: 1. The employees' rights to receive compensation are attributable to services already rendered and; 2. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. GASB Interpretation No. 6 requires leave balances that will be liquidated with expendable available financial resources (current liabilities) be accrued and reported as a governmental fund liability and expenditure. GOCO budgeted for compensated absences in the current year with current financial - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 2 - Summary of Significant Accounting Policies (continued) resources. Therefore, the full liability was accrued and reported in the Government-wide and fund financial statements. Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance as shown on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2020 and 2019 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2020 and 2019 was approximately $70.4 million and $68.5 million, respectively, which was the maximum amount allowable under the State Constitution. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $98,037 and $84,573 adjustments to capital assets as of June 30, 2020 and 2019, respectively, represent the capital assets of GOCO, net of accumulated depreciation. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2020 2019 Capital outlay Depreciation expense Net adjustment to (decrease) increase net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities - 23 - $ (30,486) 17,022 $ 20,719 $ (13,464) $ 20,719 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2020, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2020 Carrying Balance Bank Balance Cash on hand Insured deposits $ 170,767 $ 361 118,467 $ 170,767 $ 118,828 As of June 30, 2019, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2019 Carrying Balance Bank Balance Cash on hand Insured deposits $ 392,215 $ 314 153,620 $ 392,215 $ 153,934 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 4 - Cash Deposits and Investments (continued) • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2020, GOCO had cash invested with the State Treasurer of $76,851,306 which represented approximately 0.82 percent of the total $9,358.1 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2019, GOCO had cash invested with the State Treasurer of $97,616,723 which represented approximately 1.07 percent of the total $9,055.2 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pool, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Comprehensive Annual Financial Report for the year ended June 30, 2020. Summary Total cash deposits and investments are as follows: June 30, 2020 Cash deposits Investments $ 118,828 76,851,306 $ 76,970,134 - 25 - 2019 $ 153,934 97,616,723 $ 97,770,657 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 4 - Cash Deposits and Investments (continued) Investment Earnings Investment earnings are composed of the following: June 30, 2020 Investment income Net unrealized gain (loss) on investments held by the State 2019 $ 1,818,360 1,863,292 $ 1,864,956 1,429,512 $ 3,681,652 $ 3,294,468 Note 5 - Lottery Proceeds Receivable As of June 30, 2020, and 2019, GOCO had distributions owed from the Lottery amounting to $18,476,420 and $3,492,985, respectively. For the receivable as of June 30, 2020, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April through June 2020. For the receivable as of June 30, 2019, this represents GOCO’s allocation of net proceeds from the Lottery for only April 2019, the month in which GOCO reached the constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On June 30, 2020, GOCO entered into a zero-interest promissory note with The Conservation Fund, (“TCF”) in the amount of $6,250,000 for the acquisition of the Sweetwater Lake parcel for inclusion into the White River National Forest. The loan is due on June 30, 2023 and is interest-free through June 30, 2022, after which time the interest rate will equal the Colorado Treasury Pool rate of interest. TCF acquired the property in June 2020 to hold until it can be sold to the United States Forest Service when funds get appropriated from the Land and Water Conservation Fund. During Fiscal Years 2020 and 2019, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered a contingency eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds may not be expensed by GOCO until the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $1,907,698 at June 30, 2020 and $909,642 at June 30, 2019. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2020 follows: Balance at June 30, 2019 Equipment Software Furniture Intangible Assets Leasehold improvements $ Less: accumulated depreciation Total capital assets, net 46,131 125,052 38,850 32,416 22,164 264,613 Additions $ (180,040) $ 84,573 30,486 30,486 Retirements $ - (17,022) $ 13,464 Balance at June 30, 2020 $ 76,617 125,052 38,850 32,416 22,164 295,099 $ (197,062) - $ 98,037 An analysis of the changes in capital assets for the year ended June 30, 2019 follows: Balance at June 30, 2018 Equipment Software Furniture Intangible Assets Leasehold improvements Balance at June 30, 2019 Retirements $ 46,131 125,052 38,850 32,416 22,164 264,613 (159,321) $ (20,719) $ - $ 46,131 125,052 38,850 32,416 22,164 264,613 (180,040) $ 105,292 $ (20,719) $ - $ 84,573 Less: accumulated depreciation Total capital assets, net Additions - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2020 and 2019. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Cumulative Authorized Grants at June 30, 2019 Transfers/ Additions Transfers/ Deletions Cumulative Authorized Grants at June 30, 2020 $ 318,473,760 $ 20,189,089 $ (2,621,317) $ 336,041,532 312,264,030 27,376,477 (5,155,216) 334,485,291 320,454,730 14,578,775 (3,292,273) 331,741,232 349,064,331 15,659,300 (307,177) 364,416,454 $ 1,300,256,851 $ 77,803,641 $ (11,375,983) $ 1,366,684,509 Cumulative Authorized Grants at June 30, 2018 Transfers/ Additions Transfers/ Deletions Cumulative Authorized Grants at June 30, 2019 $ 298,516,973 $ 22,893,500 $ (2,936,713) $ 318,473,760 290,936,293 22,938,852 (1,611,115) 312,264,030 315,294,943 7,456,828 (2,297,041) 320,454,730 342,219,313 7,050,187 (205,169) 349,064,331 $ 1,246,967,522 $ 60,339,367 $ (7,050,038) $ 1,300,256,851 - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Cumulative Expended Grants at June 30, 2019 Transfers/ Additions Cumulative Expended Grants at June 30, 2020 $ 278,778,598 $ 20,792,773 $ 299,571,371 261,906,167 28,059,044 289,965,211 298,068,407 10,320,645 308,389,052 304,432,745 15,867,591 320,300,336 $ 1,143,185,917 $ 75,040,053 $1,218,225,970 Cumulative Expended Grants at June 30, 2018 Transfers/ Additions Cumulative Expended Grants at June 30, 2019 $ 265,534,127 $ 13,244,471 $ 278,778,598 243,440,124 18,466,043 261,906,167 287,911,131 10,157,276 298,068,407 282,428,199 22,004,546 304,432,745 $ 1,079,313,581 $ 63,872,336 $1,143,185,917 - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in January 2024, April 2022, September 2020, and October 2021, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2020 and 2019 was $127,672 and $128,243, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2021 2022 2023 2024 $ 130,019 130,005 130,213 77,082 Total $ 467,319 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2021. In Fiscal Year 2020 and 2019, GOCO's expenses on the marketing campaign were approximately $2.37 million and $2.41 million, respectively. The GOCO Board has approved a Fiscal Year 2021 budget of $2.5 million. This contract may be terminated upon advance notice with payment required on any active projects. During Fiscal Year 2019, GOCO engaged a consulting firm, Prosono, to assist with creating and implementing a multi-year strategic plan. The contract spans Fiscal Years 2019 and 2020. In Fiscal Year 2020 and 2019, GOCO paid Prosono $231,560 and $194,433, respectively for consulting services related to strategic planning. The services were completed during Fiscal Year 2020. - 30 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2020 and 2019, respectively, GOCO recognized pension expense of $8,662 and $2,500, net of forfeitures, which reduced pension expense by $5,123 and $11,729. GOCO contributed $135,875 and $129,207 to the Pension Plan for the Fiscal Years ended June 30, 2020 and 2019, respectively, which approximates the required contribution. As of June 30, 2020, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. - 32 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2020 and 2019 Note 14 – Unearned Revenue In Fiscal Year 2017, GOCO and the Colorado Health Foundation entered into a grant agreement which allocates $4 million to GOCO over a 4-year period, contingent on meeting certain requirements. These funds will be monitored by the Colorado Health Foundation and should only be used for GOCO’s Generation Wild (Formerly “Inspire”) initiative on projects approved by the Colorado Health Foundation. GOCO has received the full $4 million of the grant; $1 million each year since Fiscal Year 2017. GOCO subsequently awarded the funds to Generation Wild grantees. The proceeds were initially classified as “Unearned Revenue” until the corresponding grant expense was incurred for the qualifying grants. The grant amount received as of June 30, 2020 has been properly distributed and used by Generation Wild grantees and has thus been allocated to grant income. The balance of Unearned Grant Income of $75,000 represents a grant from the Boettcher Foundation that has been received but the contractual requirements of the grant have not yet been met. The grant agreement specifically outlines a capital project in the Generation Wild program that must be completed to meet requirements. As of June 30, 2020, this project was not yet completed, and the grant amount cannot be classified as income. Note 15 – Special Items - Project Reimbursements During Fiscal Year 2019, GOCO received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1998, GOCO made an open space legacy grant in the amount of $100,000 for a land acquisition. GOCO’s contribution made up 91% of the total purchase price of the land acquired in 1998. A portion of the land was sold in Fiscal Year 2019 for $20,675, and GOCO was reimbursed 91% of the purchase price of the property for $18,815. These types of transactions rarely occur and are considered both infrequent and unusual in nature but within management control, as the reimbursement was a result of the grant agreement. Accordingly, GOCO recorded the reimbursement as a “special item” in accordance with GASB 34. The project reimbursement is presented separately in the General Fund. There were no special items to report for Fiscal Year 2020. Note 16 – COVID-19 Contingency Prior to and subsequent to year-end, GOCO’s business operations have been disrupted by the effects of the worldwide COVID-19 pandemic. While GOCO’s finances have not been negatively impacted by the pandemic, GOCO is closely monitoring its operations, liquidity, and lottery revenue projections and is working to minimize the current and future impact of this unprecedented situation. GOCO is also monitoring the impact to its partners, grantees, Lottery, and vendors in order to respond as needed. As of the date of issuance of these financial statements, the full impact to the organization is not known. - 33 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2020 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 68,441,881 $ 70,364,774 1,500,000 69,941,881 4,682,224 75,046,998 3,182,224 5,105,117 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 65,770,750 1,793,169 3,677,524 3,000 71,244,443 75,040,053 1,724,618 3,454,499 30,486 80,249,656 (9,269,303) 68,551 223,025 (27,486) (9,005,213) (Deficiency) excess of revenues over expenditures (1,302,562) (5,202,658) (3,900,096) Fund balance – beginning of year 40,611,138 88,866,974 48,255,836 $ 39,308,576 $ 83,664,316 $ 44,355,740 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 35 - $ 1,922,893 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2019 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 67,124,547 $ 68,494,436 1,000,000 68,124,547 5,729,474 74,223,910 4,729,474 6,099,363 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 68,425,000 1,772,860 3,396,064 7,000 73,600,924 63,872,334 1,656,529 3,400,690 68,929,553 4,552,666 116,331 (4,626) 7,000 4,671,371 (Deficiency) excess of revenues over expenditures (5,476,377) 5,294,357 10,770,734 - 18,815 18,815 46,087,515 83,553,802 37,466,287 $ 40,611,138 $ 88,866,974 $ 48,255,836 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Special Item – Project Reimbursements Fund balance – beginning of year Fund balance – end of year - 36 - $ 1,369,889 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 37 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2020 and 2019, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated November 3, 2020. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 38 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. November 3, 2020 Denver, Colorado - 39 - �November 3, 2020 To the Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2020 and have issued our report thereon dated November 3, 2020. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated May 14, 2020, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. - 40 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during fiscal year 2020. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. We did not identify any sensitive accounting estimates affecting the financial statements. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: The disclosure of Cash Deposits and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, Commitments and Contingencies in Note 9, Related Parties – State Agencies in Note 11, Unearned Revenue in Note 14, Special Items – Project Reimbursements in Note 15, and COVID-19 Contingency in Note 16. The financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. There were no corrected or uncorrected misstatements noted based on procedures performed. - 41 - �Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management that are included in the management representation letter dated November 3, 2020. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, business conditions affecting the entity, and business plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. This report is intended solely for the information and use of the GOCO Board, Legislative Audit Committee, Office of the State Auditor, and management of GOCO and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee this report is a public document. Denver, Colorado - 42 - � https://cpw.cvlcollections.org/files/original/a290b4f9afc519672db16b58596b220d.pdf 1ffa6df665eed410e425e30cfc0ba056 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2019 and 2018 �LEGISLATIVE AUDIT COMMITTEE Senator Nancy Todd – Chair Representative Lori Saine – Vice-Chair Representative Rod Bockenfeld Senator Rhonda Fields Representative Tracy Kraft-Tharp Senator Paul Lundeen Representative Dafna Michaelson Jenet Senator Jim Smallwood OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 1922F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2019 MEMBERS Hollie Velasquez-Horvath– Chair Jason Brinkley David Cockrell Warren Dean Pamela Denahy Charles Garcia Dan Gibbs Karma Giulianelli Carrie Besnette Hauser Mina Liebert Leticia Martinez Turk Montepare Jody Rogers Mo Siegel Jahi Simbai Linda Strand Julie Thibodeau �October 2, 2019 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2019 and 2018. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, Eide Bailly LLP What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 7 Independent Auditor’s Report .................................................................................................................. 8 Management’s Discussion and Analysis ................................................................................................ 10 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2019 ................. 16 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2018 ................. 17 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2019............................... 18 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2018............................... 19 Notes to Financial Statements .................................................................................................... 20 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2019 ..................................... 36 Budgetary Comparison Schedule – For the Year Ended June 30, 2018 ..................................... 37 Notes to the Required Supplementary Information .................................................................... 38 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 39 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 41 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2019 and 2018 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2019 and 2018. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from May 2019 through October 2019. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2019 (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated October 2, 2019, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2019 and 2018, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated October 2, 2019, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2018 and no findings and recommendations reported for fiscal year 2019. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2019 and 2018 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2019. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2019 and 2018 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2019 was the twenty-sixth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2019, the State Board that oversees GOCO consists of a total of seventeen members: two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2019, GOCO had a permanent staff of 17 and received $68.5 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2019. During Fiscal Year 2018, GOCO had a permanent staff of 16 and received $66.3 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2018. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. The Office of the State Auditor conducted a performance audit in Fiscal Year 2017, which recommended that “GOCO should ensure that it has a clear and transparent process for categorizing grant expenditures and dividing spending across the four purposes on a substantially equal basis.” This includes defining and establishing guidelines and thresholds around the terms “substantially equal” and “a period of years” which are stated in Article XXVII. The recommendations also prompted GOCO’s board to revise and update its previous grant categorization policies to clarify the process to categorize grants into the four purposes. Certain grants that were categorized under previous policies required recategorization under GOCO’s new policies implemented in Fiscal Year 2018: • Unallocated grants – $1,170,174 of grants that were authorized and expended in prior years were not allocated to one of the four purposes and were placed in a non-categorized – discretionary classification. Under GOCO’s new policy, these grants were recategorized to the Competitive Grants for Open Space purpose. -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2019 and 2018 • Inspire grants - GOCO initiated the Inspire program area to help address barriers that prevent youth from spending time in the outdoors by working collaboratively with communities to address these barriers. Under GOCO’s previous policy these grant authorizations and expenditures were divided evenly between the Open Space and Local Governments funding purposes. Under GOCO’s new policy, GOCO staff determined that most of the Inspire grants fell into the Local Government purpose, as most of the Inspire grantees are eligible local governments. As a result, GOCO recategorized $1.07 million and $12.6 million in grant expenditures and grant authorizations, respectively, from the Open Space to the Local Government Purpose. To address the definition of “substantially equal” and “a period of years,” as also recommended by the performance audit, GOCO created a policy to address these terms, measure performance and define a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among 4 categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. As shown in the tables on the following pages, GOCO complied with the above policy on expended grants as of Fiscal Year 2019. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2020). Although the grant authorizations for the Local Government Purpose is forecasted to be outside of the 1.25% threshold at 2020, GOCO has complied with policy by passing a board resolution to describe a plan to meet the threshold for all purposes within a specified timeframe. Additionally, GOCO reports that it is working closely with Colorado Parks and Wildlife to seek out impactful projects in the Outdoor Recreation Purpose that will both further each organization’s mission and increase Outdoor Recreation’s substantially equal percentage so that it is more in line with the other purposes. See Note 8 for more details on the recategorization. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. The recategorization discussed above is reflected in the Fiscal Year 2018 amounts. -4- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2019 and 2018 GOCO Grants Cumulative through Fiscal Year 2019 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total $ 1,300,257 Grants Expended % Amount % Cumulative Difference $ 318,474 24.5% $ 278,779 24.4% 39,695 312,264 24.0 261,906 22.9 50,358 320,455 24.6 298,068 26.1 22,387 349,064 26.9 304,433 26.6 44,631 100.0% $1,143,186 100.0% $ 157,071 Source: Data provided by GOCO The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2019 FiveYear Change Funding Purpose 2015 Grants Authorized % 2016 2017 2018 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.6% 24.6% 24.2% 23.9% 24.5% (0.1)% 23.8 23.7 23.5 23.4 24.0 0.2% 25.4 26.0 26.0 25.3 24.6 (0.8)% 26.2 25.7 26.3 27.4 26.9 0.7% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -5- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2019 and 2018 GOCO Grants Expended Cumulative Trend for the Previous Five Years 2019 FiveYear Change Funding Purpose 2015 Grants Expended % 2016 2017 2018 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.5% 25.4% 25.3% 24.6% 24.4% (1.1)% 22.4 22.9 23.0 22.6 22.9 0.5% 26.4 25.7 25.5 26.7 26.1 (0.3)% 25.7 26.0 26.2 26.1 26.6 0.9% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -6- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2019 and 2018 There are no findings and recommendations reported for the years ended June 30, 2019 or June 30, 2018. -7- �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -8What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2019 and 2018, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 10 through 15 and 36 through 38 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 2, 2019, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado October 2, 2019 -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2019 and 2018. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 16. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2019, Fiscal Year 2018, and Fiscal Year 2017. Fiscal Year Ended June 30, 2019 2018 2017 Lottery revenues Grant expenditures 2019/2018 $ Variance % 2018/2017 $ Variance % $ 68,494,436 $ 66,250,998 $ 64,463,929 $ 2,243,438 3.4% $ 1,787,069 2.8% $ 63,872,334 $ 66,377,373 $ 50,782,305 $ (2,505,039) (3.8%) $ 15,595,068 30.7% 2019 GOCO received its maximum allowable Lottery proceeds for the year of approximately $68.5 million, per the constitutional cap. This represents a $2.2 million increase over Fiscal Year 2018 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures decreased by $2.5 million from Fiscal Year 2018. Grant expenditures fluctuate year to year due to timing differences of project completions. In Fiscal Year 2018, GOCO’s open space competitive program had a high amount of grant reimbursements, which decreased in Fiscal Year 2019. 2018 GOCO received its maximum allowable Lottery proceeds for the year of approximately $66.3 million, per the constitutional cap. This represents a $1.8 million increase over Fiscal Year 2017 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley CPI. Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $15.6 million from Fiscal Year 2017. Grant expenditures fluctuate year to year due to timing differences of project completions. The increase is largely due to high dollar awards to grantees in Fiscal Years 2016 and 2017 that were paid in Fiscal Year 2018. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($68.5 million and $66.3 million in Fiscal Year 2019 and Fiscal Year 2018, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2019 and Fiscal Year 2018. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2019, 2018, and 2017. 2019 June 30, 2018 2017 $ 102,293,049 84,573 102,377,622 $ 94,091,500 105,292 94,196,792 $ 94,224,483 127,177 94,351,660 Liabilities 13,426,075 10,537,698 9,231,561 Net position Invested in capital assets Unrestricted 84,573 88,866,974 105,292 83,553,802 127,177 84,992,922 $ 88,951,547 $ 83,659,094 $ 85,120,099 Current and other assets Capital assets, net Total assets Total net position - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 Government-Wide Statements (continued) 2019 The significant portions of current and other assets are cash, Lottery proceeds receivable and advanced grants payments. Cash increased by approximately $17.8 million during Fiscal Year 2019 due to an unrealized gain on GOCO’s state treasury account and the timing of grant payments. Lottery proceeds receivable decreased by approximately $7.6 million from June 30, 2018. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. Higher proceeds from Lottery in the beginning of the year reduce the receivable at the end of the year. Advanced grants payments were made during the year to grantees of GOCO’s Generation Wild (formerly “Inspire) program, a grant program funding 15 community coalitions that provide programs, infrastructure, and career pathways within the community in order to address the growing disconnect between youth and the outdoors. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. As of June 30, 2019, liabilities increased by $2.9 million from June 30, 2018. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). Total liabilities consist mostly of an accrual for CPW’s estimated April, May and June 2019 investments of approximately $12.3 million, an increase over prior year. Unearned Grant Income decreased due to the recognition of grant funds from a $4 million grant from the Colorado Health Foundation as grant income in Fiscal Year 2019, after requirements were met during the year. $3 million of this grant has been received as of June 30, 2019 and the entire amount has been recognized as grant income during Fiscal Years 2018 and 2019. The balance of Unearned Grant Income of $75,000 represents a grant from the Boettcher Foundation that has been received but the contractual requirements of the grant have not yet been met. Please see Note 14 for further explanation. 2018 The significant portions of current and other assets are cash, Lottery proceeds receivable, advanced grants payments, and notes receivable. Cash increased by approximately $1.5 million during Fiscal Year 2018 due to timing of grant payments. Lottery proceeds receivable decreased by approximately $3 million from June 30, 2017. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. Higher proceeds from Lottery in the beginning of the year reduce the receivable at the end of the year. Advanced grants payments were made during the year to Inspire grantees. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. The $1 million note receivable consists of a promissory note entered on June 9, 2006 between GOCO and the City of Colorado Springs, Colorado for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Please see Note 6 for further explanation. As of June 30, 2018, liabilities increased by $1.3 million from June 30, 2017. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, unearned grant revenue, and estimates of reimbursable costs incurred by CPW. The amount includes an accrual for CPW’s estimated June 2018 CPW investments of approximately $4.2 million. Grants payable increased by approximately $778,000 largely due to timing of completion of Local Government projects before year end. The increase in Unearned Grant Income was due to the receipt of the second installment ($1 million) of a $4 million grant from the Colorado Health Foundation in Fiscal Year 2018. The balance of Unearned Grant - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 Government-Wide Statements (continued) Income of $1.4 million represents the grants that have been received but the contractual requirements of the grant have not yet been met. GOCO recognized approximately $605,000 of this grant as of June 30, 2018. Please see Note 14 for further explanation. Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2019, 2018, and 2017. Fiscal Years Ended June 30, 2019 2018 2017 Revenue Lottery revenue $ 68,494,436 $ 66,250,998 $ 64,463,929 Miscellaneous/Grant income and investment earnings 5,729,474 914,078 258,616 Total revenue 74,223,910 67,165,076 64,722,545 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 63,872,334 1,656,529 3,421,409 68,950,272 66,377,373 1,574,344 2,940,383 70,892,100 50,782,305 1,436,930 2,436,392 54,655,627 Special Item Grant Reimbursements 18,815 2,266,019 - Change in net position 5,292,453 (1,461,005) 10,066,918 Beginning net position 83,659,094 85,120,099 75,053,181 Ending net position $ 88,951,547 $ 83,659,094 $ 85,120,099 2019 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2019 increased by $4.8 million. The increase is due to the revenue recognition of previously unearned grant income of $2.4 million received from a Colorado Health Foundation grant. Additionally, GOCO’s investments held by the State Treasury experienced an unrealized gain of $1.4 million and earned interest income of approximately $1.8 million. Grant expenditures in Fiscal Year 2019 decreased by $2.5 million from Fiscal Year 2018 primarily due to a decrease in project completions of open space grant programs. Grant expenditures are made on a reimbursement basis. Fiscal Year 2018 and 2019 awards were lower than the first two years of GOCO’s 2016-2020 Spending Plan, resulting in lower grant payments in 2019. Operating expenditures increased - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 Government-Wide Statements (continued) from prior year due to inflation, a project to implement a multi-year strategic plan and the increase in budget for the Generation Wild marketing campaign designed to get Colorado kids and their families outside more often. During 2019, GOCO received one reimbursement from the proceeds of a land sale from a grantee in the amount of $18,815, as stipulated in their grant agreement. This transaction was considered infrequent and unusual in nature and was classified as a Special Item. In 2018, a similar land sale transaction occurred for $2.3 million, causing a decrease in Special Items. See Note 15 for more detail. 2018 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2018 increased by $655,462. The increase is due to the revenue recognition of previously unearned grant income of $605,000 received from the Colorado Health Foundation. Additionally, GOCO’s investments held by the State Treasury experienced an unrealized loss of $940,175 which was offset by interest income of approximately $1.2 million. Grant expenditures in Fiscal Year 2018 increased by $15.6 million from Fiscal Year 2017 primarily due to an increase in completed competitive grant projects for open space. Grant expenditures are made on a reimbursement basis. Operating expenditures increased from prior year due to inflation and the increase in budget for the Generation Wild marketing campaign designed to get Colorado kids and their families outside more often. During 2018, GOCO received reimbursements from the proceeds of land sales from grantees in the amount of $2.3 million, as stipulated in their grant agreements from prior years. These transactions were considered infrequent and unusual in nature and are classified as Special Items. See Note 15 for more detail. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $69 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2020. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to be consistent or higher in the next year as grantees continue to expend the large awards granted in Fiscal Years 2016 and 2017. As GOCO comes to the end of its 5-year strategic funding plan in Fiscal Year 2020, focus will continue to be placed on compliance with its constitutional requirement that expenditures in each of the four purposes over a period of years be substantially equal (article XXVII). The Outdoor Recreation purpose has had a significantly lower expenditure ratio than the other purposes over the past several years even though authorizations have increased. To improve this throughput issue, GOCO will seek to fund large high priority projects in the Outdoor Recreation purpose. For example, GOCO is planning to collaborate with CPW and other partners to contribute to Colorado’s next state park in Trinidad, Colorado, which will require funding in the next year and increase GOCO’s expenditures in the Outdoor Recreation purpose. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2019 and 2018 Economic Factors and Next Year’s Budget (continued) Also, GOCO is budgeting $5.5 million for operating expenditures. The increase from prior year is due to GOCO’s focus on creating a new strategic plan in 2020 with the help of consultants and an upgrade to management IT systems. Operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Capital outlay $ 1,793,169 3,677,524 3,000 Total 2020 Budgeted Operating Expenditures $ 5,473,693 - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2019 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 97,770,657 3,492,985 909,642 101,852 17,913 - $ 84,573 $ 97,770,657 3,492,985 909,642 101,852 17,913 84,573 Total assets $ 102,293,049 $ 84,573 $ 102,377,622 Grants payable Accounts payable Compensated absences payable Unearned Grant Income $ 12,915,657 377,419 57,999 75,000 $ - $ 12,915,657 377,419 57,999 75,000 Total liabilities $ 13,426,075 - $ 13,426,075 101,852 88,765,122 88,866,974 (101,852) (88,765,122) (88,866,974) - 84,573 88,866,974 84,573 88,866,974 $ 88,951,547 $ 88,951,547 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 102,293,049 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2018 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Advanced Grant Payments Prepaid Expenses Other Assets Capital assets, net of accumulated depreciation $ 80,008,144 11,114,576 1,000,000 1,696,256 102,241 170,283 - $ 105,292 $ 80,008,144 11,114,576 1,000,000 1,696,256 102,241 170,281 105,292 Total assets $ 94,091,500 $ 105,292 $ 94,196,792 $ $ - $ $ 10,537,698 - $ 10,537,698 102,241 83,451,561 83,553,802 (102,241) (83,451,561) (83,553,802) - 105,292 83,553,802 105,292 83,553,802 $ 83,659,094 $ 83,659,094 Liabilities Grants payable Accounts payable Compensated absences payable Unearned Grant Income Total liabilities 8,866,448 225,777 50,676 1,394,797 8,866,448 225,777 50,676 1,394,797 Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Non-spendable Assigned Total fund balances Total liabilities and fund balances $ 94,091,500 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2019 Adjustments (Note 3) Statement of Activities $ 20,719 20,719 $ 63,872,334 1,656,529 3,421,409 68,950,272 - 68,494,436 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Total expenditures/expenses $ 63,872,334 1,656,529 3,400,690 68,929,553 Program revenues – State Lottery proceeds 68,494,436 Net program revenues (expenses) (455,836) General revenues Grant income Investment earnings Total general revenues 2,435,006 3,294,468 5,729,474 - 2,435,006 3,294,468 5,729,474 Excess (deficiency) of revenues over expenditures 5,294,357 (20,719) 5,273,638 Special item Project reimbursements 18,815 - 18,815 Change in fund balance 5,313,172 (5,313,172) Change in net position - 5,292,453 5,292,453 Fund balance/net position – beginning of the year 83,553,802 105,292 83,659,094 Fund balance/net position – end of the year $ 88,866,974 84,573 $ 88,951,547 $ See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2018 Adjustments (Note 3) Statement of Activities $ 27,385 (5,500) 21,885 $ 66,377,373 1,574,344 2,940,383 70,892,100 - 66,250,998 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 66,377,373 1,574,344 2,912,998 5,500 70,870,215 Program revenues – State Lottery proceeds 66,250,998 Net program revenues (expenses) (4,641,102) General revenues Grant income Investment earnings Total general revenues 607,850 306,228 914,078 - 607,850 306,228 914,078 Excess (deficiency) of revenues over expenditures (3,705,139) (21,885) (3,727,024) Special item Project reimbursements 2,266,019 - 2,266,019 Change in fund balance (1,439,120) 1,439,120 Change in net position - (1,461,005) (1,461,005) Fund balance/net position – beginning of the year 84,992,922 127,177 85,120,099 Fund balance/net position – end of the year $ 83,553,802 105,292 $ 83,659,094 $ See Notes to the Financial Statements - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant and personnel expenditures as of June 30, 2018. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. Outside of the nonspendable fund balance as shown on the Governmental Fund Balance Sheets and Statements of Net Position, all of GOCO’s fund balance is classified as assigned in Fiscal Year 2019 and 2018 as it is intended for grants awarded. These grants were awarded by the GOCO Board of Trustees and authorized by Board Resolution in compliance with GOCO’s policies as set forth in the Colorado Constitution. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2019 and 2018 was approximately $68.5 million and $66.3 million, respectively, which was the maximum amount allowable under the State Constitution. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $84,573 and $105,292 adjustments to capital assets as of June 30, 2019 and 2018, respectively, represent the capital assets of GOCO, net of accumulated depreciation. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2019 2018 Capital outlay Depreciation expense Net adjustment to decrease (increase) net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities $ 20,719 $ (5,500) 27,385 $ (20,719) $ (21,885) Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 4 - Cash Deposits and Investments (continued) held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. As of June 30, 2019, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2019 Carrying Balance Bank Balance Cash on hand Insured deposits $ 392,215 $ 314 153,620 $ 392,215 $ 153,934 As of June 30, 2018, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2018 Carrying Balance Bank Balance Cash on hand Insured deposits $ 225,136 $ 242 113,756 $ 225,136 $ 113,998 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2019, GOCO had cash invested with the State Treasurer of $97,616,723 which represented approximately 1.07 percent of the total $9,055.2 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2018, GOCO had cash invested with the State Treasurer of $79,894,146 which represented approximately 1.03 percent of the total $7,635.8 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments as an increase or decrease in cash. The State Treasurer does not invest any of the Pool’s resources in any external investment pool, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Comprehensive Annual Financial Report for the year ended June 30, 2019. Summary Total cash deposits and investments are as follows: June 30, 2019 Cash deposits Investments $ 2018 153,934 97,616,723 $ 97,770,657 $ 113,998 79,894,146 $ 80,008,144 Investment Earnings Investment earnings are composed of the following: June 30, 2019 Investment income Net unrealized gain (loss) on investments held by the State - 26 - 2018 $ 1,864,956 1,429,512 $ 1,246,403 (940,175) $ 3,294,468 $ 306,228 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 5 - Lottery Proceeds Receivable As of June 30, 2019, and 2018, GOCO had distributions owed from the Lottery amounting to $3,492,985 and $11,114,576, respectively. For the receivable as of June 30, 2019, this represents GOCO’s allocation of net proceeds from the Lottery for the month of April 2019, in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2018, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April, May and June 2018, the month in which GOCO reached the constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On June 9, 2006, GOCO entered into a zero-interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property could not be recorded until the COPs were paid in full. Accordingly, the easement was placed in escrow and remained there until the COPs had been paid in full by the City, which occurred in January 2019. Upon the due date of the note, the note would be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Non-exchange Transactions, the note was considered an advance until these requirements were met. GOCO was informed that the requirements were met in May of 2019, at which time GOCO reclassified the note to grant expense. During Fiscal Years 2019 and 2018, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered a contingency eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds may not be expensed by GOCO until the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $909,642 at June 30, 2019 and $1,696,256 at June 30, 2018. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2019 follows: Balance at June 30, 2018 Equipment Software Furniture Intangible Assets Leasehold improvements Balance at June 30, 2019 Retirements $ 46,131 125,052 38,850 32,416 22,164 264,613 (159,321) $ (20,719) $ - $ 46,131 125,052 38,850 32,416 22,164 264,613 (180,040) $ 105,292 $ (20,719) $ - $ 84,573 Less: accumulated depreciation Total capital assets, net Additions An analysis of the changes in capital assets for the year ended June 30, 2018 follows: Balance at June 30, 2017 Equipment Software Furniture Leasehold improvements Balance at June 30, 2018 Retirements $ 46,131 119,552 38,850 32,416 22,164 259,113 (131,936) $ 5,500 5,500 (27,385) $ - $ 46,131 125,052 38,850 32,416 22,164 264,613 (159,321) $ 127,177 $ (21,885) $ - $ 105,292 Less: accumulated depreciation Total capital assets, net Additions Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2019 and 2018. Due to a GOCO policy change related to categorization of grants, certain grants awarded from 2016 to 2018 were reclassified from Competitive grants for open space (Purpose 3 – open space) to Competitive grants to local governments for open lands and parks (Purpose 4 – local government). The reclassification was an outcome of a thorough review of GOCO’s policies and procedures around classification of grants to the four purposes outlined in the Colorado Constitution. This review was recommended by a performance audit completed in 2018 by the Office of the State Auditor. GOCO reclassified both authorizations and expenditures in the amounts of $12.6 million and $1.07 million, respectively. These grants were authorized under GOCO’s Generation Wild (Formerly “Inspire”) program. In addition, the policy change required a recategorization of previously “unallocated” expenditures and authorizations that were not categorized to a purpose. Under the new - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) policy, these grants of $1.1 million should be recategorized to the open space purpose. See the “Reclassification” column below for the effect of the policy change. Grants Authorized Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Non-categorized Discretionary Cumulative Authorized Grants at June 30, 2018 Transfers/ Additions Reclassification Transfers/ Deletions Cumulative Authorized Grants at June 30, 2019 $ 298,516,973 $ 22,893,500 $ - $ (2,936,713) $ 318,473,760 290,936,293 22,938,852 - (1,611,115) 312,264,030 315,294,943 7,456,828 - (2,297,041) 320,454,730 342,219,313 7,050,187 - (205,169) 349,064,331 $ 1,246,967,522 $ 60,339,367 - $ (7,050,038) $ 1,300,256,851 Transfers/ Deletions Cumulative Authorized Grants at June 30, 2018 $ Cumulative Authorized Grants at June 30, 2017 Transfers/ Additions Reclassification $ 282,548,545 $ 16,690,500 $ 274,970,758 18,351,795 304,475,394 (722,072) $ 298,516,973 - (2,386,260) 290,936,293 24,401,899 (11,462,441) (2,119,909) 315,294,943 307,560,055 22,079,092 12,632,615 (52,449) 342,219,313 1,170,174 - (1,170,174) - - $ 1,170,724,926 $ 81,523,286 - $ (5,280,690) $ 1,246,967,522 - 29 - $ - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized Discretionary Cumulative Expended Grants at June 30, 2018 Transfers/ Additions Reclassification $ 265,534,127 $ 13,244,471 $ 243,440,124 Cumulative Expended Grants at June 30, 2019 - $ 278,778,598 18,466,043 - 261,906,167 287,911,131 10,157,276 - 298,068,407 282,428,199 22,004,546 - 304,432,745 $ 1,079,313,581 $ 63,872,336 - $ 1,143,185,917 Cumulative Expended Grants at June 30, 2017 Transfers/ Additions $ 255,900,842 $ $ Reclassification 9,633,285 $ Cumulative Expended Grants at June 30, 2018 - $ 265,534,127 232,908,914 10,531,210 - 243,440,124 258,113,938 29,701,623 95,570 287,911,131 264,842,334 16,511,261 1,074,604 282,428,199 1,170,174 - (1,170,174) - $1,012,936,202 $ 66,377,379 - 30 - $ - $ 1,079,313,581 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in January 2024, April 2022, September 2020, and October 2021, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2019 and 2018 was $128,243 and $128,521, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2020 2021 2022 2023 2024 $ 129,682 128,705 130,389 130,213 77,082 Total $ 596,071 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2020. In Fiscal Year 2018 and 2019, GOCO's expenses on the marketing campaign were approximately $2.15 million $2.41 million, respectively. The GOCO Board has approved a Fiscal Year 2020 budget of $2.5 million. This contract may be terminated upon advance notice with payment required on any active projects. During Fiscal Year 2019, GOCO engaged a consulting firm, Prosono, to assist with creating and implementing a multi-year strategic plan. The contract spans Fiscal Years 2019 and 2020. In Fiscal Year 2019, GOCO paid Prosono $194,433 for consulting services related to strategic planning. The GOCO Board has approved a Fiscal Year 2020 budget for these services of $212,115. This contract may be terminated upon 30-day notice with payment required on any work performed. Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 10 - Pension Plans (continued) Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO recognized pension expense of $2,500 and $13,365 for the Fiscal Years Ended June 30, 2019 and 2018, respectively. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2019 and 2018, respectively, forfeitures reduced GOCO’s pension expense by $11,729 and $0. GOCO contributed $129,207 and $121,804 to the Pension Plan for the Fiscal Years ended June 30, 2019 and 2018, respectively, which approximates the required contribution. As of June 30, 2019, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 ex- 32 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 11 - Related Parties - State Agencies (continued) officio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 14 – Unearned Revenue In Fiscal Year 2017, GOCO and the Colorado Health Foundation entered into a grant agreement which allocates $4 million to GOCO over a 4-year period, contingent on meeting certain requirements. These funds will be monitored by the Colorado Health Foundation and should only be used for GOCO’s Generation Wild (Formerly “Inspire”) initiative on projects approved by the Colorado Health Foundation. GOCO has received $3 million of the grant; $1 million each year since Fiscal Year 2017. GOCO subsequently awarded the funds to Generation Wild grantees. The proceeds were initially classified as “Unearned Revenue” until the corresponding grant expense was incurred for the qualifying - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2019 and 2018 Note 14 – Unearned Revenue (continued) grants. The grant amount received as of June 30, 2019 has been properly distributed and used by Generation Wild grantees and has thus been allocated to grant income. The balance of Unearned Grant Income of $75,000 represents a grant from the Boettcher Foundation that has been received but the contractual requirements of the grant have not yet been met. The grant agreement specifically outlines a capital project in the Generation Wild program that must be completed to meet requirements. As of June 30, 2019, this project was not yet completed and the grant amount cannot be classified as income. Note 15 – Special Items - Project Reimbursements During Fiscal Year 2019, GOCO received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1998, GOCO made an open space legacy grant in the amount of $100,000 for a land acquisition. GOCO’s contribution made up 91% of the total purchase price of the land acquired in 1998. A portion of the land was sold in Fiscal Year 2019 for $20,675, and GOCO was reimbursed 91% of the purchase price of the property for $18,815. During Fiscal Year 2018, GOCO also received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1999, GOCO made an open space conservation grant in the amount of $3.9 million for a land acquisition. The grant agreement stipulated that if the grantee ever sold the property, GOCO would be reimbursed 54% of the proceeds. A portion of the land was sold in Fiscal Year 2018 and GOCO was reimbursed $2.1 million. Also, in Fiscal Year 2018, CPW reimbursed GOCO $148,347 as a result of a termination easement. In 2004, CPW granted acquisition of a 20-year term conservation easement, which was funded by GOCO. The conservation easement since terminated and per the grant agreement, GOCO (through CPW) was reimbursed 50% of the acquisition costs. These types of transactions rarely occur and are considered both infrequent and unusual in nature but within management control, as the reimbursement was a result of the grant agreement. Accordingly, GOCO recorded the reimbursement as a “special item” in accordance with GASB 34. The project reimbursement is presented separately in the General Fund. - 34 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2019 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 67,124,547 $ 68,494,436 1,000,000 68,124,547 5,729,474 74,223,910 4,729,474 6,099,363 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 68,425,000 1,772,860 3,396,064 7,000 73,600,924 63,872,334 1,656,529 3,400,690 68,929,553 4,552,666 116,331 (4,626) 7,000 4,671,371 (Deficiency) excess of revenues over expenditures (5,476,377) 5,294,357 10,770,734 - 18,815 18,815 46,087,515 83,553,802 37,466,287 $ 40,611,138 $ 88,866,974 $ 48,255,836 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Special Item – Project Reimbursements Fund balance – beginning of year Fund balance – end of year - 36 - $ 1,369,889 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2018 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 64,925,978 $ 66,250,998 2,650,000 67,575,978 914,078 67,165,076 (1,735,922) (410,902) Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 65,240,000 1,540,188 3,189,556 24,560 69,994,304 66,377,373 1,574,344 2,912,998 5,500 70,870,215 (1,137,373) (34,156) 276,558 19,060 (875,911) (Deficiency) excess of revenues over expenditures (2,418,326) (3,705,139) (1,286,813) - 2,266,019 2,266,019 48,505,841 84,992,922 36,487,081 $ 46,087,515 $ 83,553,802 $ 37,466,287 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Special Item – Project Reimbursements Fund balance – beginning of year Fund balance – end of year - 37 - $ 1,325,020 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 38 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated October 2, 2019. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 39 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. October 2, 2019 Denver, Colorado - 40 - �October 2, 2019 To the Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2019, and have issued our report thereon dated October 2, 2019. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated May 13, 2019, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. - 41 What inspires you, inspires us. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during fiscal year 2019. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. We did not identify any sensitive accounting estimates affecting the financial statements. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: The disclosure of Cash Deposits and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, Commitments and Contingencies in Note 9, Related Parties – State Agencies in Note 11, Unearned Revenue in Note 14, and Special Items – Project Reimbursements in Note 15. The financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. There were no corrected or uncorrected misstatements noted based on procedures performed. - 42 - �Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to GOCO’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management that are included in the management representation letter dated October 2, 2019. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, business conditions affecting the entity, and business plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. This report is intended solely for the information and use of the GOCO Board, and management of GOCO and is not intended to be, and should not be, used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee this report is a public document. Denver, Colorado - 43 - � https://cpw.cvlcollections.org/files/original/97867876a7ed09bb4db13a570cdf7126.pdf 502972bb0d2178a966dabdc02c0b49fa PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2018 and 2017 �LEGISLATIVE AUDIT COMMITTEE Senator Tim Neville – Chair Senator Rhonda Fields Representative Tracy Kraft-Tharp Representative Dafna Michaelson Jenet Senator Nancy Todd – Vice-Chair Representative Kim Ransom Representative Lori Saine Senator Jim Smallwood OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 1822F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2018 MEMBERS Jason Brinkley– Chair Katie Cattanach Hollie Velasquez-Horvath Jenn Dice Tony Lewis Tom Burke Julie Thibodeau Chana Reed Jody Rogers Warren Dean Dave Palenchar Linda Strand Jacy Rock Karma Giulianelli Bob Randall John Howard Carrie Besnette Hauser �October 16, 2018 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the years ended June 30, 2018 and 2017. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, Eide Bailly LLP What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 2 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 3 Auditor’s Findings and Recommendations .............................................................................................. 7 Independent Auditor’s Report .................................................................................................................. 8 Management’s Discussion and Analysis ................................................................................................ 10 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2018 ................. 15 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2017 ................. 16 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2018............................... 17 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2017............................... 18 Notes to Financial Statements .................................................................................................... 19 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2018 ..................................... 35 Budgetary Comparison Schedule – For the Year Ended June 30, 2017 ..................................... 36 Notes to the Required Supplementary Information .................................................................... 37 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 38 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 40 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2018 and 2017 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial and compliance audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Years ended June 30, 2018 and 2017. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The audit work was performed during the period from May 2018 through October 2018. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to test GOCO’s compliance with certain rules and regulations governing the expenditures of State funds for the year ended June 30, 2018 (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITOR’S OPINIONS AND REPORTS An independent auditor’s report on the financial statements of GOCO, dated October 16, 2018, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2018 and 2017, and the change in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated October 16, 2018, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF AUDIT RECOMMENDATIONS There were no prior year audit recommendations in fiscal year 2017 and no findings and recommendations reported for fiscal year 2018. 1 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2018 and 2017 Recommendation Number Page Number Recommendation Summary Response Implementation Date There are no findings and recommendations reported for the year ended June 30, 2018. 2 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2018 and 2017 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2018 was the twenty-fifth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver-Boulder-Greeley Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2018, House Bill 18-066 extended the termination date of Lottery to July 1, 2049, thus continuing funding for GOCO through June 30, 2049. As of June 30, 2018, the State Board that oversees GOCO consists of a total of seventeen members: two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2018, GOCO had a permanent staff of 16 and received $66.3 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2018. During Fiscal Year 2017, GOCO had a permanent staff of 16 and received $64.5 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2017. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. The Office of the State Auditor conducted a performance audit in Fiscal Year 2017, which recommended that “GOCO should ensure that it has a clear and transparent process for categorizing grant expenditures and dividing spending across the four purposes on a substantially equal basis.” This includes defining and establishing guidelines and thresholds around the terms “substantially equal” and “a period of years” which are stated in Article XXVII. The recommendations also prompted GOCO’s board to revise and update its previous grant categorization policies to clarify the process to categorize grants into the four purposes. Certain grants that were categorized under previous policies required recategorization under GOCO’s new policies implemented in Fiscal Year 2018: • Unallocated grants – $1,170,174 of grants that were authorized and expended in prior years were not allocated to one of the four purposes and were placed in a non-categorized – discretionary classification. Under GOCO’s new policy, these grants were recategorized to the Competitive Grants for Open Space purpose. 3 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2018 and 2017 • Inspire grants – GOCO initiated the Inspire program area to help address barriers that prevent youth from spending time in the outdoors by working collaboratively with communities to address these barriers. Under GOCO’s previous policy these grant authorizations and expenditures were divided evenly between the Open Space and Local Governments funding purposes. Under GOCO’s new policy, GOCO staff determined that most of the Inspire grants fell into the Local Government purpose, as most of the Inspire grantees are eligible local governments. As a result, GOCO recategorized $1.07 million and $12.6 million in grant expenditures and grant authorizations, respectively, from the Open Space to the Local Government Purpose. To address the definition of “substantially equal” and “a period of years,” as also recommended by the performance audit, GOCO created a policy to address these terms, measure performance and define a process for addressing issues of non-compliance. This policy sets tolerance thresholds of the percentage variance from 25% (exactly equal among 4 categories), with different timeframes for authorizations and expenditures. The policy states: • • For grant authorizations, substantially equal means a range of tolerance of +/- 1.25% of 25% per funding category, to be measured cumulatively from the organization’s inception to the forecasted end of a board-adopted multi-year spending plan. For grant expenditures, substantially equal means a range of tolerance of +/-2.5% of 25% per funding category, measured cumulatively from the organization’s inception to the end of the most recently closed fiscal year, as established via the annual financial audit of the organization. As shown in the tables on the following pages, GOCO complied with the above policy on expended grants as of Fiscal Year 2018. Authorized grants are measured for compliance as forecasted at the end of the multi-year spending plan (Fiscal Year 2020). Although the Local Government Purpose is forecasted to be outside of the 1.25% threshold at 2020, GOCO has complied with policy by passing a board resolution to describe a plan to meet threshold for all purposes within a specified timeframe. See Note 8 for more details on the recategorization. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. The recategorization discussed above is reflected in the Fiscal Year 2018 amounts. 4 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2018 and 2017 GOCO Grants Cumulative through Fiscal Year 2018 (in thousands) Grants Authorized Funding Purpose Amount Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks $ Total $ 1,246,967 Grants Expended % Amount % Cumulative Difference $ 298,517 23.9% $ 265,534 24.6% 32,983 290,936 23.4 243,440 22.6 47,496 315,295 25.3 287,911 26.7 27,384 342,219 27.4 282,428 26.1 59,791 100.0% $1,079,313 100.0% $ 167,654 Source: Data provided by GOCO The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2018 FiveYear Change Funding Purpose 2014 Grants Authorized % 2015 2016 2017 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.8% 24.6% 24.6% 24.2% 23.9% (0.9)% 23.1 23.8 23.7 23.5 23.4 0.3% 25.6 25.4 26.0 26.0 25.3 (0.3)% 26.5 26.2 25.7 26.3 27.4 0.9% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO 5 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2018 and 2017 GOCO Grants Expended Cumulative Trend for the Previous Five Years 2018 FiveYear Change Funding Purpose 2014 Grants Expended % 2015 2016 2017 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.5% 25.5% 25.4% 25.3% 24.6% (0.9)% 22.3 22.4 22.9 23.0 22.6 0.3% 26.6 26.4 25.7 25.5 26.7 0.1% 25.6 25.7 26.0 26.2 26.1 0.5% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO 6 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Auditor’s Findings and Recommendations Financial and Compliance Audit For the Years Ended June 30, 2018 and 2017 There are no findings and recommendations reported for the years ended June 30, 2018 or June 30, 2017. 7 �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2018 and 2017, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -8What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2018 and 2017, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 7 through 11 and 32 through 34 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 16, 2018, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado October 16, 2018 -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2018 and 2017 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2018 and 2017. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 12. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2018, Fiscal Year 2017, and Fiscal Year 2016. Fiscal Year Ended June 30, 2018 2017 2016 Lottery revenues Grant expenditures 2018/2017 $ Variance % 2017/2016 $ Variance % $ 66,250,998 $ 64,463,929 $ 63,714,505 $ 1,787,069 2.8% $ 749,424 1.2% $ 66,377,373 $ 50,782,305 $ 44,934,958 $ 15,595,068 30.7% $ 5,847,347 13.0% 2018 GOCO received its maximum allowable Lottery proceeds for the year of approximately $66.3 million, per the constitutional cap. This represents a $1.8 million increase over Fiscal Year 2017 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley Consumer Price Index (“CPI”). Per Article XXVII, Section 3 of the Colorado Constitution, GOCO’s proceeds received from Lottery is capped at $35 million using the base year of 1992, adjusted annually for inflation. Grant expenditures increased by $15.6 million from Fiscal Year 2017. Grant expenditures fluctuate year to year due to timing differences of project completions. The increase is largely due to high dollar awards to grantees in Fiscal Years 2016 and 2017 that were paid in Fiscal Year 2018. 2017 GOCO received its maximum allowable Lottery proceeds for the year of approximately $64.5 million, per the constitutional cap. This represents a $749,424 increase over Fiscal Year 2016 in Lottery proceeds to GOCO due to an increase in the Denver-Boulder-Greeley CPI. Grant expenditures increased by $5.8 million from Fiscal Year 2016. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year historically. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2018 and 2017 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($66.3 million and $64.5 million in Fiscal Year 2018 and Fiscal Year 2017, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2018 and Fiscal Year 2017. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2018, 2017, and 2016. 2018 June 30, 2017 2016 $ 94,091,500 105,292 94,196,792 $ 94,224,483 127,177 94,351,660 $ 95,533,739 78,361 95,612,100 Liabilities 10,537,698 9,231,561 20,558,919 Net position Invested in capital assets Unrestricted 105,292 83,553,802 127,177 84,992,922 78,361 74,974,820 $ 83,659,094 $ 85,120,099 $ 75,053,181 Current and other assets Capital assets, net Total assets Total net position - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2018 and 2017 Government-Wide Statements (continued) 2018 The significant portions of current and other assets are cash, Lottery proceeds receivable, advanced grants payments, and notes receivable. Cash increased by approximately $1.5 million during Fiscal Year 2018 due to timing of grant payments. Lottery proceeds receivable decreased by approximately $3 million from June 30, 2017. This represents the amount of proceeds due from Lottery at the end of the year to meet the constitutional cap. Higher proceeds from Lottery in the beginning of the year reduce the receivable at the end of the year. Advanced grants payments were made during the year to Inspire grantees. These advances will be recognized as grant expense once the contractual obligations are met by the grantees. The $1 million note receivable consists of a promissory note entered on June 9, 2006 between GOCO and the City of Colorado Springs, Colorado for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Please see Note 6 for further explanation. As of June 30, 2018, liabilities increased by $1.3 million from June 30, 2017. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, unearned grant revenue, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes an accrual for CPW’s estimated June 2018 Parks and Wildlife investments of approximately $4.2 million. Grants payable increased by approximately $778,000 largely due to timing of completion of Local Government projects before year end. The increase in Unearned Grant Income was due to the receipt of the second installment ($1 million) of a $4 million grant from the Colorado Health Foundation in Fiscal Year 2018. The balance of Unearned Grant Income of $1.4 million represents the grants that have been received but the contractual requirements of the grant have not yet been met. GOCO recognized approximately $605,000 of this grant as of June 30, 2018. Please see Note 14 for further explanation. 2017 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash decreased by approximately $8 million during Fiscal Year 2017. Lottery proceeds receivable increased to $14.1 million at June 30, 2017 from $7.9 million at June 30, 2016. The increase in the receivable is due to meeting Lottery’s constitutional cap later in the year in Fiscal Year 17 than Fiscal Year 16. Proceeds from the entire 4th quarter of Fiscal Year 17 are included in the receivable. GOCO reached the constitutional cap amount in May for Fiscal Year 2016. As of June 30, 2017, liabilities decreased by $11.3 million from June 30, 2016. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The decrease is mainly due to a decrease in grants payable to CPW. A large accrual was recorded at the end of 2016 which included 6 months of CPW invoices. However, invoices from CPW were received more timely in Fiscal Year 2017 and the current accrual consists of only 2 months of invoices. Accruals for local government and open space projects also decreased at June 30, 2017 due to timing of completion of projects. The increase in Accounts Payable is due to a $40,706 rent payable that was recorded due to the structure of the lease for GOCO’s office space. The lessor provided an incentive allowance of 4 months of abated rent at the start of the lease term. The abatement was deferred as a liability and amortized straight-line as an adjustment to rent expense over the life of the lease. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2018 and 2017 Government-Wide Statements (continued) Additionally, Unearned Revenue was recorded to recognize a grant received from the Colorado Health Foundation where the contractual requirements of the grant have not yet been met. Please see Note 14 for more information on the Unearned Revenue. Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2018, 2017, and 2016. Fiscal Years Ended June 30, 2018 2017 2016 Revenue Lottery revenue $ 66,250,998 $ 64,463,929 $ 63,714,505 Miscellaneous/Grant income and investment earnings 914,078 258,616 967,734 Total revenue 67,165,076 64,722,545 64,682,239 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 66,377,373 1,574,344 2,940,383 70,892,100 50,782,305 1,436,930 2,436,392 54,655,627 44,934,958 1,287,515 1,039,547 47,262,020 Special Item Grant Reimbursements 2,266,019 - - Change in net position (1,461,005) 10,066,918 17,420,219 Beginning net position 85,120,099 75,053,181 57,632,962 Ending net position $ 83,659,094 $ 85,120,099 $ 75,053,181 2018 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2018 increased by $655,462. The increase is due to the revenue recognition of previously unearned grant income of $605,000 received from the Colorado Health Foundation. Additionally, GOCO’s investments held by the State Treasury experienced an unrealized loss of $940,175 which was offset by interest income of approximately $1.2 million. Grant expenditures in Fiscal Year 2018 increased by $15.6 million from Fiscal Year 2017 primarily due to an increase in completed competitive grant projects for open space. Grant expenditures are made on a reimbursement basis. Operating expenditures increased from prior year due to inflation and the increase in budget for the Generation Wild marketing campaign designed to get Colorado kids and their families outside more often. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2018 and 2017 Government-Wide Statements (continued) During 2018, GOCO received reimbursements from the proceeds of land sales from grantees, as stipulated in their grant agreements from prior years. These transactions were considered infrequent and unusual in nature and are classified as Special Items. See Note 15 for more detail. 2017 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2017 decreased by approximately $709 thousand. GOCO’s investments held by the State Treasury experienced an unrealized loss of approximately $600,000 which was offset by interest income of approximately $858,000. Grant expenditures in Fiscal Year 2017 increased by $5.8 million from Fiscal Year 2016 primarily due to an increase in completed competitive grant projects for open space. Grant expenditures are made on a reimbursement basis. Operating expenditures increased from prior year due to the increase in budget for the Generation Wild 2-year marketing campaign designed to get Colorado kids and their families outside more often. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $67.1 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2019. Although the constitutional cap has historically been met, GOCO prefers to budget conservatively, as Lottery revenues are unpredictable. Grant expenditures are expected to be consistent in future years as grantees continue to expend the large awards granted in Fiscal Years 2016 and 2017. Also, GOCO is budgeting $5.2 million for operating expenditures. The increase from prior year is due to an increase in GOCO staffing including the addition of one full time employee and the continuation of the Generation Wild marketing campaign. Operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Capital outlay $ 1,772,860 3,396,064 7,000 Total 2019 Budgeted Operating Expenditures $ 5,175,924 - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2018 General Fund Adjustments (Note 3) Statement of Net Position 105,292 $ 80,008,144 11,114,576 1,000,000 1,696,256 272,524 105,292 $ 94,196,792 Assets Cash and investments Lottery proceeds receivable Note receivable Advanced Grant Payments Other Assets Capital assets, net of accumulated depreciation $ 80,008,144 11,114,576 1,000,000 1,696,256 272,524 - $ Total assets $ 94,091,500 $ 105,292 $ $ - $ $ 10,537,698 - $ 10,537,698 83,553,802 83,553,802 (83,553,802) (83,553,802) - 105,292 83,553,802 105,292 83,553,802 $ 83,659,094 $ 83,659,094 Liabilities Grants payable Accounts payable Compensated absences payable Unearned Grant Income Total liabilities 8,866,448 225,777 50,676 1,394,797 8,866,448 225,777 50,676 1,394,797 Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Assigned Total fund balances Total liabilities and fund balances $ 94,091,500 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2017 General Fund Adjustments (Note 3) Statement of Net Position 127,177 $ 78,526,219 14,098,436 1,000,000 599,828 127,177 $ 94,351,660 Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 78,526,219 14,098,436 1,000,000 599,828 - $ Total assets $ 94,224,483 $ 127,177 Grants payable Accounts payable Compensated absences payable Unearned Grant Income $ 8,088,440 104,894 38,227 1,000,000 $ - $ 8,088,440 104,894 38,227 1,000,000 Total liabilities $ 9,231,561 - $ 9,231,561 84,992,922 84,992,922 (84,992,922) (84,992,922) - 127,177 84,992,922 127,177 84,992,922 $ 85,120,099 $ 85,120,099 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Assigned Total fund balances Total liabilities and fund balances $ 94,224,483 Net position Invested in capital assets Unrestricted Total net position See Notes to the Financial Statements - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2018 Adjustments (Note 3) Statement of Activities $ 27,385 (5,500) 21,885 $ 66,377,373 1,574,344 2,940,383 70,892,100 - 66,250,998 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 66,377,373 1,574,344 2,912,998 5,500 70,870,215 Program revenues – State Lottery proceeds 66,250,998 Net program revenues (expenses) (4,641,102) General revenues Grant income Investment earnings Total general revenues 607,850 306,228 914,078 - 607,850 306,228 914,078 Excess (deficiency) of revenues over expenditures (3,705,139) (21,885) (3,727,024) Special item Project reimbursements 2,266,019 - 2,266,019 Change in fund balance (1,439,120) 1,439,120 Change in net position - (1,461,005) (1,461,005) Fund balance/net position – beginning of the year 84,992,922 127,177 85,120,099 Fund balance/net position – end of the year $ 83,553,802 105,292 $ 83,659,094 $ See Notes to the Financial Statements - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2017 Adjustments (Note 3) Statement of Activities $ 48,903 (97,719) (48,816) $ 50,782,305 1,436,930 2,436,392 54,655,627 - 64,463,929 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 50,782,305 1,436,930 2,387,489 97,719 54,704,443 Program revenues – State Lottery proceeds 64,463,929 Net program revenues (expenses) 9,808,302 General revenues Miscellaneous income Investment earnings Total general revenues 1,075 257,541 258,616 - 1,075 257,541 258,616 Excess (deficiency) of revenues over expenditures Change in net position 10,018,102 - (10,018,102) 10,066,918 10,066,918 Fund balance/net position – beginning of the year 74,974,820 78,361 75,053,181 Fund balance/net position – end of the year $ 84,992,922 127,177 $ 85,120,099 $ See Notes to the Financial Statements - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. GOCO’s general fund exceeded budget due to higher than budgeted grant and personnel expenditures as of June 30, 2018. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. GOCO’s fund balance is classified as assigned in Fiscal Year 2018 and 2017 as it is intended for grants awarded. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2018 and 2017 was approximately $66.3 million and $64.5 million, respectively, which was the maximum amount allowable under the State Constitution. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) reported in the fund. The $105,292 and $127,177 adjustments to capital assets as of June 30, 2018 and 2017, respectively, represent the capital assets of GOCO, net of accumulated depreciation. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2018 2017 Capital outlay Depreciation expense Loss on disposal Net adjustment to decrease (increase) net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities $ (5,500) 27,385 - $ (97,719) 45,749 3,154 $ (21,885) $ 48,816 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 4 - Cash Deposits and Investments (continued) As of June 30, 2018, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2018 Carrying Balance Bank Balance Cash on hand Insured deposits $ 225,136 $ 242 113,756 $ 225,136 $ 113,998 As of June 30, 2017, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2017 Carrying Balance Bank Balance Cash on hand Insured deposits $ 673,330 $ 185 162,284 $ 673,330 $ 162,469 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2018, GOCO had cash invested with the State Treasurer of $79,894,146 which represented approximately 1.03 percent of the total $7,635.8 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2017, GOCO had cash invested with the State Treasurer of $78,363,750 which represented approximately 1.16 percent of the total $6,770.2 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports as an increase or decrease in cash for its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments. The State Treasurer does not invest any of the Pool’s resources in any external investment pool, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Comprehensive Annual Financial Report for the year ended June 30, 2018. Summary Total cash deposits and investments are as follows: June 30, 2018 Cash deposits Investments $ 2017 113,998 79,894,146 $ 80,008,144 $ 162,469 78,363,750 $ 78,526,219 Investment Earnings Investment earnings are composed of the following: June 30, 2018 Investment income Net unrealized gain (loss) on investments held by the State - 25 - 2017 $ 1,246,403 (940,175) $ 857,573 (600,032) $ 306,228 $ 257,541 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 5 - Lottery Proceeds Receivable As of June 30, 2018, and 2017, GOCO had distributions owed from the Lottery amounting to $11,114,576 and $14,098,436, respectively. For the receivable as of June 30, 2018, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April, May and June 2018, the month in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2017, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April, May and June 2017, the month in which GOCO reached the constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable and Advanced Grant Payments On June 9, 2006, GOCO entered into a zero interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property cannot be recorded until the COPs are paid in full. Accordingly, the easement has been placed in escrow and will remain there until the COPs have been paid in full by the City, estimated to be in November 2018. Upon the due date of the note, the note will be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Non-exchange Transactions, the note is considered an advance until these requirements are met. At the time the requirements are met, GOCO will reclassify the note to grant expense. During Fiscal Year 2018, GOCO made certain payments to grantees in advance of completion of project objectives outlined in the grant agreements. Under this arrangement, GOCO requires the grantee to provide an annual expense report that describes how the advance payment was spent throughout the year. The expenses must comply with contractual obligations outlined in the grant agreement. This is considered a contingency eligibility requirement under GASB 33, as GOCO may request reimbursement of the advanced funds if the grantee does not provide the requested information or if the funds were improperly used. These funds may not be expensed by GOCO until the appropriate documentation is received. The Advanced Grant Payment balance on the Statement of Net Position is $1,696,256 at June 30, 2018. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2018 follows: Balance at June 30, 2017 Equipment Software Furniture Intangible Assets Leasehold improvements Balance at June 30, 2018 Retirements $ 46,131 119,552 38,850 32,416 22,164 259,113 (131,936) $ 5,500 5,500 (27,385) $ - $ 46,131 125,052 38,850 32,416 22,164 264,613 (159,321) $ 127,177 $ (21,885) $ - $ 105,292 Less: accumulated depreciation Total capital assets, net Additions An analysis of the changes in capital assets for the year ended June 30, 2017 follows: Balance at July 1, 2016 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2017 $ 40,455 119,552 31,033 14,560 205,600 (127,239) $ 5,676 37,463 32,416 22,164 97,719 (45,749) $ (29,646) (14,560) (44,206) 41,052 $ 46,131 119,552 38,850 32,416 22,164 259,113 (131,936) $ 78,361 $ 51,970 $ (3,154) $ 127,177 Less: accumulated depreciation Total capital assets, net Additions Note 8 - Authorized Grants and Expended Grants (Unaudited) The following table is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2018 and 2017. Due to a GOCO policy change related to categorization of grants, certain grants awarded from 2016 to 2018 were reclassified from Competitive grants for open space (Purpose 3 – open space) to Competitive grants to local governments for open lands and parks (Purpose 4 – local government). The reclassification was an outcome of a thorough review of GOCO’s policies and procedures around classification of grants to the four purposes outlined in the Colorado Constitution. This review was recommended by a performance audit completed in 2018 by the Office of the State Auditor. GOCO reclassified both authorizations and expenditures in the amounts of $12.6 million and $1.07 million, respectively. These grants were authorized under GOCO’s Inspire program. In addition, the policy change required a recategorization of previously “unallocated” expenditures and authorizations that were not categorized to a purpose. Under the new policy, these grants of $1.1 million - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) should be recategorized to the open space purpose. See the “Reclassification” column below for the effect of the policy change. Grants Authorized (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 Competitive grants for open space Purpose 4 Competitive matching grants to local governments for open lands and parks Non-categorized Discretionary Cumulative Authorized Grants at June 30, 2017 Transfers/ Additions Reclassification $ 282,548,545 $ 16,690,500 $ 274,970,758 18,351,795 304,475,394 Transfers/ Deletions (722,072) $ 298,516,973 - (2,386,260) 290,936,293 24,401,899 (11,462,441) (2,119,909) 315,294,943 307,560,055 22,079,092 12,632,615 (52,449) 342,219,313 1,170,174 - (1,170,174) - - $ 1,170,724,926 $ 81,523,286 - $ (5,280,690) $ 1,246,967,522 Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2016 - Cumulative Authorized Grants at June 30, 2018 $ Transfers/ Additions $ 267,363,045 258,336,825 $ 15,185,500 16,633,933 $ Cumulative Authorized Grants at June 30, 2017 Transfers/ Deletions $ - $ 282,548,545 274,970,758 282,652,952 25,342,832 (3,520,390) 304,475,394 279,222,508 1,170,174 28,422,006 - (84,459) - 307,560,055 1,170,174 85,584,271 $ (3,604,849) $ 1,170,724,926 $ 1,088,745,504 $ - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 8 - Authorized Grants and Expended Grants (Unaudited) (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized Discretionary Cumulative Expended Grants at June 30, 2017 $ 255,900,842 Transfers/ Additions $ Reclassification 9,633,285 $ Cumulative Expended Grants at June 30, 2018 - $ 265,534,127 232,908,914 10,531,210 - 243,440,124 258,113,938 29,701,623 95,570 287,911,131 264,842,334 16,511,261 1,074,604 282,428,199 1,170,174 - (1,170,174) - $1,012,936,202 $ 66,377,379 Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ - Cumulative Expended Grants at June 30, 2016 $ 243,920,065 219,648,939 Transfers/ Additions Cumulative Expended Grants at June 30, 2017 11,980,777 13,259,975 $ 255,900,842 232,908,914 247,435,865 10,678,073 258,113,938 249,978,855 1,170,174 14,863,479 - 264,842,334 1,170,174 50,782,305 $1,012,936,203 $ 962,153,898 - 29 - $ $ 1,079,313,581 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in January 2024, April 2022, September 2020, and October 2021, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2018 and 2017 was $128,521 and $153,446, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2019 2020 2021 2022 2023 Thereafter $ 128,358 129,683 128,705 130,389 130,213 77,082 Total $ 724,430 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising for services for the Generation Wild marketing campaign, a statewide, multi-media, integrated movement connecting Colorado kids and families with the outdoors. The research and strategy phase of the campaign started in Fiscal Year 2016, and the program has now extended into Fiscal Year 2019. In Fiscal Year 2018, GOCO's expenses on the marketing campaign were approximately $2.15 million. The GOCO Board has approved a Fiscal Year 2019 budget of $2.5 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. - 30 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 10 - Pension Plans (continued) Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO recognized pension expense of $13,365 and $12,663 for the Fiscal Years Ended June 30, 2018 and 2017, respectively. Employees are vested on a two-year schedule contingent on 1,000 hours of service during each of the two years. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2018 and 2017, respectively, forfeitures reduced GOCO’s pension expense by $0 and $430. GOCO contributed $121,804 and $114,761 to the Pension Plan for the Fiscal Years ended June 30, 2018 and 2017, respectively, which approximates the required contribution. As of June 30, 2018, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. - 31 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 11 - Related Parties - State Agencies (continued) Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 14 – Unearned Revenue In Fiscal Year 2017, GOCO and the Colorado Health Foundation entered into a grant agreement which allocates $4 million to GOCO over a 4-year period, contingent on meeting certain requirements. These funds will be monitored by the Colorado Health Foundation and should only be used for GOCO’s Inspire initiative on projects approved by the Colorado Health Foundation. GOCO has received $2 million of the grant; $1 million during Fiscal Year 2017 and $1 million in December 2017. GOCO subsequently awarded the funds to Inspire grantees. The proceeds were initially classified as “Unearned Revenue” until the corresponding grant expense was incurred for the qualifying Inspire grants. The Statement of Net Position has an Unearned Revenue balance of $1.4 million that represents proceeds that have been awarded but the contract requirements are not yet met. - 32 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 20, 2018 and 2017 Note 15 – Special Items - Project Reimbursements During Fiscal Year 2018, GOCO received a cash payment from a grantee for a reimbursement of land sale proceeds. In 1999, GOCO made an open space conservation grant in the amount of $3.9 million for a land acquisition. The grant agreement stipulated that if the grantee ever sold the property, GOCO would be reimbursed 54% of the proceeds. A portion of the land was sold in Fiscal Year 2018 and GOCO was reimbursed $2.1 million. Also, in Fiscal Year 2018, CPW reimbursed GOCO $148,347 as a result of a termination easement. In 2004, CPW granted acquisition of a 20-year term conservation easement, which was funded by GOCO. The conservation easement since terminated and per the grant agreement, GOCO (through CPW) was reimbursed 50% of the acquisition costs. These types of transactions rarely occur and are considered both infrequent and unusual in nature but within management control, as they were reimbursed as a result of the grant agreements. Accordingly, GOCO recorded the reimbursements as “special items” in accordance with GASB 34. The project reimbursements are presented separately in the General Fund. - 33 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2018 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 64,925,978 $ 66,250,998 2,650,000 67,575,978 914,078 67,165,076 (1,735,922) (410,902) Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 65,240,000 1,540,188 3,189,556 24,560 69,994,304 66,377,373 1,574,344 2,912,998 5,500 70,870,215 (1,137,373) (34,156) 276,558 19,060 (875,911) (Deficiency) excess of revenues over expenditures (2,418,326) (3,705,139) (1,286,813) - 2,266,019 2,266,019 48,505,841 84,992,922 36,487,081 $ 46,087,515 $ 83,553,802 $ 37,466,287 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Special Item – Project Reimbursements Fund balance – beginning of year Fund balance – end of year - 35 - $ 1,325,020 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2017 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 61,900,000 $ 64,463,929 300,000 62,200,000 258,616 64,722,545 (41,383) 2,522,545 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 80,425,000 1,447,549 2,196,037 123,500 84,192,086 50,782,305 1,436,930 2,387,489 97,719 54,704,443 29,642,695 10,619 (191,452) 25,781 29,487,643 (Deficiency) excess of revenues over expenditures (21,992,086) 10,018,102 (32,010,188) Fund balance – beginning of year 70,497,927 74,974,820 4,476,893 $ 48,505,841 $ 84,992,922 $ 36,487,081 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 36 - $ 2,563,929 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 37 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the years ended June 30, 2018 and 2017, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated October 16, 2018. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 38 What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Governmental Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. October 16, 2018 Denver, Colorado - 39 - �October 16, 2018 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited the financial statements of Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2018, and have issued our report thereon dated October 16, 2018. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated May 17, 2018, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of its respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. - 40 What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during fiscal year 2018. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. We did not identify any sensitive accounting estimates affecting the financial statements. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: The disclosure of Cash Deposits and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable and Advanced Grant Payments in Note 6, Authorized Grants and Expended Grants (Unaudited) in Note 8, Commitments and Contingencies in Note 9, Related Parties – State Agencies in Note 11, Unearned Revenue in Note 14, and Special Item – Project Reimbursements in Note 15. The financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. - 41 - �Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. There were no corrected or uncorrected misstatements noted based on procedures performed. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management that are included in the management representation letter dated October 16, 2018. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, business conditions affecting the entity, and business plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. - 42 - �This report is intended solely for the information and use of the GOCO Board, and management of GOCO and is not intended to be and should not be used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee this report is a public document. Denver, Colorado - 43 - � https://cpw.cvlcollections.org/files/original/d8d26af4f4eebca2df68d1ce29244106.pdf a0a47a3175cc2d6a784306b99c795151 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2017 and 2016 �LEGISLATIVE AUDIT COMMITTEE Representative Tracy Kraft-Tharp – Chair Senator Kerry Donovan Senator Cheri Jahn Representative Dan Nordberg Senator Tim Neville – Vice-Chair Representative Lori Saine Senator Jim Smallwood Representative Faith Winter OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Gina Faulkner Contract Monitor Eide Bailly, LLP Contractor AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.COLORADO.GOV/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 1722F WHEN REQUESTING THIS REPORT �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2017 MEMBERS Jason Brinkley– Chair Katie Cattanach Hollie Velasquez-Horvath Jenn Dice Tony Lewis Tom Burke Alan Schwartz Chana Reed Jody Rogers Heather Carroll Dave Palenchar Linda Strand Jacy Rock Karma Giulianelli Bob Randall John Howard Michelle Zimmerman �November 17, 2017 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee, We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the year ended June 30, 2017. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 2 Independent Auditors’ Report .................................................................................................................. 5 Management’s Discussion and Analysis .................................................................................................. 7 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2017 ................. 12 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2016 ................. 13 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2017............................... 14 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2016............................... 15 Notes to Financial Statements .................................................................................................... 16 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2017 ..................................... 30 Budgetary Comparison Schedule – For the Year Ended June 30, 2016 ..................................... 31 Notes to the Required Supplementary Information .................................................................... 32 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 33 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 35 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2017 and 2016 AUTHORITY, PURPOSE, AND SCOPE The Office of the State Auditor, State of Colorado, engaged Eide Bailly LLP to conduct the financial audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the Fiscal Year ended June 30, 2017. Eide Bailly LLP conducted the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to review GOCO’s compliance with appropriate state and federal laws and rules and regulations that could have a material effect on GOCO’s financial statements; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITORS’ OPINIONS AND REPORTS An independent auditors’ report on the financial statements of GOCO, dated November 17, 2017, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2017, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated November 17, 2017, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. 1 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2017 and 2016 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2017 was the twenty-fourth year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2002, House Bill 1250 extended the termination date of Lottery to July 1, 2024, thus continuing funding for GOCO through June 30, 2024. As of June 30, 2017, the State Board that oversees GOCO consists of two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2017, GOCO had a permanent staff of 16 and received $64.5 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2017. During Fiscal Year 2016, GOCO had a permanent staff of 15 and received $63.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2016. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. 2 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2017 and 2016 GOCO Grants Cumulative through Fiscal Year 2017 (in thousands) Grants Authorized Amount % Funding Purpose Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks Non-categorized – Discretionary Total $ Grants Expended Amount % Cumulative Difference between Grants Authorized and Expended 282,549 24.2% $ 255,901 25.3% 274,971 23.5 232,909 23.0 42,062 304,475 26.0 258,119 25.5 46,356 307,560 26.3 264,842 26.2 42,718 1,170 N/A 1,170 N/A 0 $ 1,170,725 100.0% $1,012,941 100.0% $ 26,648 $ 157,784 Source: Data provided by GOCO The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2017 FiveYear Change Funding Purpose 2013 Grants Authorized % 2014 2015 2016 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.9% 24.8% 24.6% 24.6% 24.2% (0.7)% 22.9 23.1 23.8 23.7 23.5 0.6% 25.7 25.6 25.4 26.0 26.0 0.3% 26.5 26.5 26.2 25.7 26.3 (0.2)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO 3 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2017 and 2016 GOCO Grants Expended Cumulative Trend for the Previous Five Years 2017 FiveYear Change Funding Purpose 2013 Grants Expended % 2014 2015 2016 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.7% 25.5% 25.5% 25.4% 25.3% (0.4)% 21.8 22.3 22.4 22.9 23.0 1.2% 26.6 26.6 26.4 25.7 25.5 (1.1)% 25.9 25.6 25.7 26.0 26.2 0.3% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO 4 �Independent Auditor’s Report Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2017 and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -5What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2017, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Comparative Statements The basic financial statements as of June 30, 2016 were audited by other auditors, whose report dated October 7, 2016 expressed an unmodified opinion on those statements. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 7 through 11 and 30 through 32 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2017 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GOCO’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. Denver, Colorado November 17, 2017 -6- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2017 and 2016 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the Fiscal years ended June 30, 2017 and 2016. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 13. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2017, Fiscal Year 2016, and Fiscal Year 2015. 2017 Lottery revenues Grant expenditures Fiscal Year Ended June 30, 2016 2015 $ 64,463,929 $ 50,782,305 $ 63,714,505 $ 44,934,958 $ 61,992,978 $ 50,803,068 2017/2016 Variance 2016/2015 Variance $ 749,424 $ 5,847,347 $ 1,721,527 $ (5,868,110) 2017 GOCO received its maximum allowable Lottery proceeds for the year of approximately $64.5 million, per the constitutional cap. This represents a $749,424 increase over Fiscal Year 2016 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures increased by $5.8 million from Fiscal Year 2016. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year historically. 2016 GOCO received its maximum allowable Lottery proceeds for the year of approximately $63.7 million, per the constitutional cap. This represents an approximate $1.7 million increase over Fiscal Year 2015 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures decreased by $5.9 million from Fiscal Year 2015. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2016 expenditures were lower than the average primarily due to a decrease in project completion of competitive grants for open space. -7- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2017 and 2016 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO: • The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status. • The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows: • • • 40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($64.5 million and $63.7 million in Fiscal Year 2017 and Fiscal Year 2016, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2017 and Fiscal Year 2016. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2017, 2016, and 2015. June 30, 2017 2016 2015 Current and other assets Capital assets, net Total assets $ 94,224,483 127,177 94,351,660 $ 95,533,739 78,361 95,612,100 $ 74,429,953 92,350 74,522,303 Liabilities 9,231,561 20,558,919 16,889,341 Net position Invested in capital assets Restricted Unrestricted 127,177 84,992,922 - 78,361 74,974,820 - 92,350 57,540,612 - $ 85,120,099 $ 75,053,181 $ 57,632,962 Total net position -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2017 and 2016 Government-Wide Statements (continued) 2017 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash decreased by approximately $8 million during Fiscal Year 2017. Lottery proceeds receivable increased to $14.1 million at June 30, 2017 from $7.9 million at June 30, 2016. The increase in the receivable is due to meeting Lottery’s constitutional cap later in the year in Fiscal Year 17 than Fiscal Year 16. Proceeds from the entire 4th quarter of Fiscal Year 17 are included in the receivable. GOCO reached the constitutional cap amount in May for Fiscal Year 2016. As of June 30, 2017, liabilities decreased by $11.3 million from June 30, 2016. The liabilities outstanding at Fiscal Year End consisted mainly of monthly bills, grants payable, and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The decrease is mainly due to a decrease in grants payable to CPW. A large accrual was recorded at the end of 2016 which included 6 months of CPW invoices. However, invoices from CPW were received more timely in Fiscal Year 2017 and the current accrual consists of only 2 months of invoices. Accruals for local government and open space projects also decreased at June 30, 2017 due to timing of completion of projects. The increase in Accounts Payable is due to a $40,706 rent payable that was recorded due to the structure of the lease for GOCO’s office space. The lessor provided an incentive allowance of 4 months of abated rent at the start of the lease term. The abatement was deferred as a liability and amortized straight-line as an adjustment to rent expense over the life of the lease. Additionally, Unearned Revenue was recorded to recognize a grant received from the Colorado Health Foundation where the contractual requirements of the grant have not yet been met. Please see Note 14 for more information on the Unearned Revenue. 2016 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $27.1 million during Fiscal Year 2016. Lottery proceeds receivable decreased to $7.9 million at June 30, 2016 from $13.9 million at June 30, 2015. The decrease in the receivable is due to of the receipt of a large distribution of Lottery revenue during the third quarter of Fiscal Year 2016. GOCO reached the constitutional cap amount in May for Fiscal Year 2016 and reached the constitutional cap amount in June for Fiscal Year 2015. As of June 30, 2016, liabilities increased by $3.7 million from June 30, 2015. The liabilities outstanding at Fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes an accrual for the January 2016 through June 2016 bills for Parks and Wildlife investments for Fiscal Year 2016. The amount accrued for Wildlife monthly bills and land transactions was $1.8 million less in Fiscal Year 2016. The amount accrued for Parks monthly bills was $3.3 million more in Fiscal Year 2016. The increase in the Parks accrual is largely due to increased Parks spending on capital projects. Open Space purposes had approximately $1.4 million more accrued in Fiscal Year 2016. In addition, $800 thousand more in local government grants was accrued in Fiscal Year 2016. -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2017 and 2016 Government-Wide Statements (continued) Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2017, 2016, and 2015. 2017 Revenue Lottery revenue Miscellaneous income and investment earnings Total revenue Fiscal Years Ended June 30, 2016 2015 $ 64,463,929 $ 63,714,505 $ 61,992,978 258,616 64,722,545 967,734 64,682,239 571,627 62,564,605 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 50,782,305 1,436,930 2,436,392 54,655,627 44,934,958 1,287,515 1,039,547 47,262,020 50,803,068 1,232,271 1,061,607 53,096,946 Change in net position 10,066,918 17,420,219 9,467,659 Beginning net position 75,053,181 57,632,962 48,165,303 Ending net position $ 85,120,099 $ 75,053,181 $ 57,632,962 2017 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2017 decreased by approximately $709 thousand. GOCO’s investments held by the treasury experienced an unrealized loss of approximately $600,000 which was offset by interest income of approximately $858,000. Grant expenditures in Fiscal Year 2017 increased by $5.8 million from Fiscal Year 2016 primarily due to an increase in completed competitive grant projects for open space. Grant expenditures are made on a reimbursement basis. Operating expenditures increased from prior year due to the increase in budget for the Generation Wild 2-year marketing campaign designed to get Colorado kids and their families outside more often. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2017 and 2016 Government-Wide Statements (continued) 2016 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2016 increased by approximately $396 thousand as a result of an increase of approximately $58 thousand in actual cash received for earnings and a higher unrealized gain in Fiscal Year 2016 of approximately $359 thousand compared to Fiscal Year 2015. Grant expenditures in Fiscal Year 2016 decreased by $5.9 million from Fiscal Year 2015 primarily due to a decrease in project completion of competitive grants for open space. Grant expenditures are made on a reimbursement basis. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $64.9 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2018. Although the constitutional cap has historically been met, growth in Lottery sales have been decreasing since 2013 and discussions with Lottery staff indicate that this trend may continue, and the cap may not be met in future years. Grant expenditures are expected to increase in future years as grantees continue to expend the large awards granted in Fiscal Years 2016 and 2017. Also, GOCO is budgeting $4.75 million for operating expenditures. The increase from prior year is due to the second phase of the Generation Wild marketing campaign. The highest expense for the campaign will be incurred in 2018 and will decrease in future years. Operating expenditures are classified as follows: Personnel services and benefits Operating expenditures Capital outlay - 11 - $ 1,540,187 3,189,557 24,560 $ 4.754,304 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2017 General Fund Adjustments (Note 3) Statement of Net Position 127,177 $ 78,526,219 14,098,436 1,000,000 599,828 127,177 $ 94,351,660 Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 78,526,219 14,098,436 1,000,000 599,828 - $ Total assets $ 94,224,483 $ 127,177 Grants payable Accounts payable Compensated absences payable Unearned Grant Income $ 8,088,440 104,894 38,227 1,000,000 $ - $ 8,088,440 104,894 38,227 1,000,000 Total liabilities $ 9,231,561 - $ 9,231,561 84,992,922 84,992,922 (84,992,922) (84,992,922) - 127,177 84,992,922 127,177 84,992,922 $ 85,120,099 $ 85,120,099 Liabilities Commitments and contingencies (See Note 9) Fund Balances/Net Position Fund balances Assigned Total fund balances Total liabilities and fund balances $ 94,224,483 Net position Invested in capital assets Restricted Total net position See Notes to the Financial Statements - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2016 General Fund Adjustments (Note 3) Statement of Net Position 78,361 $ 86,549,551 7,887,187 1,000,000 97,001 78,361 Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 86,549,551 7,887,187 1,000,000 97,001 - $ Total assets $ 95,533,739 $ 78,361 $ 95,612,100 $ 20,449,327 82,887 26,705 20,558,919 $ - $ 20,449,327 82,887 26,705 20,558,919 (74,974,820) (74,974,820) - 78,361 74,974,820 78,361 74,974,820 $ 75,053,181 $ 75,053,181 Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities Commitments and contingencies Fund Balances/Net Position Fund balances Assigned Total fund balances 74,974,820 74,974,820 Total liabilities and fund balances $ 95,533,739 Net position Invested in capital assets Restricted Total net position See Notes to the Financial Statements - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2017 Adjustments (Note 3) Statement of Activities $ 48,903 (97,719) (48,816) $ 50,782,305 1,436,930 2,436,392 54,655,627 - 64,463,929 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 50,782,305 1,436,930 2,387,489 97,719 54,704,443 Program revenues – State Lottery proceeds 64,463,929 Net program revenues (expenses) 9,808,302 General revenues Miscellaneous income Investment earnings Total general revenues 1,075 257,541 258,616 - 1,075 257,541 258,616 Excess (deficiency) of expenditures over revenues Change in net position 10,018,102 - (10,018,102) 10,066,918 10,066,918 Fund balance/net position – beginning of the year 74,974,820 78,361 75,053,181 Fund balance/net position – end of the year $ 84,992,922 127,177 $ 85,120,099 $ See Notes to the Financial Statements - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2016 Adjustments (Note 3) Statement of Activities $ 45,220 (31,231) 13,989 $ 44,934,958 1,287,515 1,039,547 47,262,020 - 63,714,505 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 44,934,958 1,287,515 994,327 31,231 47,248,031 Program revenues – State Lottery proceeds 63,714,505 Net program revenues (expenses) 16,452,485 General revenues Miscellaneous income Investment earnings Total general revenues 6,130 961,604 967,734 - 6,130 961,604 967,734 Excess (deficiency) of expenditures over revenues Change in net position 17,434,208 - (17,434,208) 17,420,219 17,420,219 Fund balance/net position – beginning of the year 57,540,612 92,350 57,632,962 Fund balance/net position – end of the year $ 74,974,820 78,361 $ 75,053,181 $ See Notes to the Financial Statements - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Asset Type Years Furniture and fixtures Computer hardware and software Equipment 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Intangible assets, which were added in Fiscal Year 2017 related to trademarks purchased for the Generation Wild marketing campaign, have indefinite lives and are not depreciated. An impairment analysis will be performed annually to determine the correct carrying amount of the assets. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position The fund balance is classified according to a hierarchy based on spending constraints as follows: Nonspendable Funds – amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact (ex. inventory). Restricted Funds – amounts constrained externally by creditors, grantors, contributors, or laws or regulations of governments; or imposed by law through constitutional provisions or enabling legislation. Committed Funds – amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolution by GOCO’s Board of Trustees. Assigned Funds – amounts set aside for planned or intended purposes but are not restricted or committed. Unassigned Funds – the residual classification for amounts that have not been classified in any of the above categories. GOCO’s fund balance is classified as assigned in Fiscal Year 2017 and 2016 as it is intended for grants awarded. State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2017 and 2016 was approximately $64.5 million and $63.7 million, respectively, which was the maximum amount allowable under the State Constitution. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) reported in the fund. The $127,177 and $78,361 adjustments to capital assets as of June 30, 2017 and 2016, respectively, represent the capital assets of GOCO, net of accumulated depreciation. Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2017 2016 Capital outlay Depreciation expense Loss on disposal Net adjustment to decrease (increase) net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities $ (97,719) 45,749 3,154 $ (31,231) 41,583 3,637 $ 48,816 $ 13,989 Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 4 - Cash Deposits and Investments (continued) As of June 30, 2017, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2017 Carrying Balance Bank Balance Cash on hand Insured deposits $ 673,330 $ 185 162,284 $ 673,330 $ 162,469 As of June 30, 2016, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2016 Carrying Balance Bank Balance Cash on hand Insured deposits $ 232,155 $ 119 94,120 $ 232,155 $ 94,239 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include: • • • • • • Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO deposits its cash with the Colorado State Treasurer. The State Treasurer pools these deposits and invests them in securities authorized by Section 24-75-601.1, C.R.S. The State Treasury acts as a bank for all state agencies and institutions of higher education, with the exception of the University of Colorado. Moneys deposited in the Treasury are invested until the cash is needed. As of June 30, 2017, GOCO had cash invested with the State Treasurer of $78,363,750 which represented approximately 1.16 percent of the total $6,770.2 million fair value of deposits in the State Treasurer’s Pool (Pool). As of June 30, 2016, GOCO’s cash invested with the State Treasury was $86,455,312 which represented approximately 1.17% of the $7,408 million fair value of deposits in the Pool. On the basis of GOCO’s participation in the Pool, GOCO reports as an increase or decrease in cash for its share of the Treasurer’s unrealized gains and losses on the Pool’s underlying investments. The State Treasurer does not invest any of the Pool’s resources in any external investment pool, and there is no assignment of income related to participation in the Pool. The unrealized gains/losses included in income reflect only the change in fair value for the fiscal year. Additional information on investments of the State Treasurer’s Pool may be obtained in the state’s Comprehensive Annual Financial Report for the year ended June 30, 2017. Summary Total cash deposits and investments are as follows: June 30, 2017 Cash deposits Investments $ 2016 162,469 78,363,750 $ 78,526,219 $ 94,239 86,455,312 $ 86,549,551 Investment Earnings Investment earnings are composed of the following: June 30, 2017 Investment income Net unrealized gain (loss) on investments held by the State - 22 - 2016 $ 857,573 (600,032) $ 589,774 371,830 $ 257,541 $ 961,604 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 5 - Lottery Proceeds Receivable As of June 30, 2017, and 2016, GOCO had distributions owed from the Lottery amounting to $14,098,436 and $7,887,187, respectively. For the receivable as of June 30, 2017, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2017, May 2017 and June 2017, the month in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2016, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2016 and May 2016, the month in which GOCO reached the constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable On June 9, 2006, GOCO entered into a zero interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property cannot be recorded until the COPs are paid in full. Accordingly, the easement has been placed in escrow and will remain there until the COPs have been paid in full by the City, estimated to be in 2018. Upon the due date of the note, the note will be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Non-exchange Transactions, the note is considered an advance until these requirements are met. At the time the requirements are met, GOCO will reclassify the note to grant expense. Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2017 follows: Balance at July 1, 2016 Equipment Software Furniture Intangible Assets Leasehold improvements Retirements Balance at June 30, 2017 $ 40,455 119,552 31,033 14,560 205,600 (127,239) $ 5,676 37,463 32,416 22,164 97,719 (45,749) $ (29,646) (14,560) (44,206) 41,052 $ 46,131 119,552 38,850 32,416 22,164 259,113 (131,936) $ 78,361 $ 51,970 $ (3,154) $ 127,177 Less: accumulated depreciation Total capital assets, net Additions - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 7 - Capital Assets (continued) An analysis of the changes in capital assets for the year ended June 30, 2016 follows: Balance at July 1, 2015 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2016 $ 46,870 103,229 31,033 14,560 195,692 (103,342) $ 7,224 24,007 31,231 (41,583) $ (13,639) (7,684) (21,323) 17,686 $ 40,455 119,552 31,033 14,560 205,600 (127,239) $ 92,350 $ (10,352) $ (3,637) $ 78,361 Less: accumulated depreciation Total capital assets, net Additions Note 8 - Authorized Grants and Expended Grants The following is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2017 and 2016: Grants Authorized (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2016 Transfers/ Additions $ 267,363,045 258,336,825 $ 15,185,500 16,633,933 Cumulative Authorized Grants at June 30, 2017 Transfers/ Deletions $ - $ 282,548,545 274,970,758 282,652,952 25,342,832 (3,520,390) 304,475,394 279,222,508 1,170,174 28,422,006 - (84,459) - 307,560,055 1,170,174 85,584,271 $ (3,604,849) $ 1,170,724,926 $ 1,088,745,504 $ - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 8 - Authorized Grants and Expended Grants (continued) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2015 Transfers/ Additions $ 252,583,491 244,275,860 $ 15,280,585 15,280,185 Transfers/ Deletions Cumulative Authorized Grants at June 30, 2016 (501,031) (1,219,220) $ 267,363,045 258,336,825 $ 260,708,745 22,881,264 (937,057) 282,652,952 268,408,359 1,170,174 10,850,000 - (35,851) - 279,222,508 1,170,174 64,292,034 $ (2,693,159) $ 1,088,745,504 Transfers/ Additions Cumulative Expended Grants at June 30, 2017 1,027,146,629 $ Grants Expended Cumulative Expended Grants at June 30, 2016 Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 243,920,065 219,648,939 247,435,865 $ 249,978,855 1,170,174 11,980,777 13,259,975 10,678,073 $ 255,900,842 232,908,914 258,113,938 14,863,479 - 264,842,334 1,170,174 50,782,305 $1,012,936,203 $ 962,153,898 $ Cumulative Expended Grants at June 30, 2015 Transfers/ Additions $ 233,202,445 205,096,032 242,069,845 $ 235,680,444 1,170,174 $ 917,218,940 - 25 - $ Cumulative Expended Grants at June 30, 2016 10,717,620 14,552,907 5,366,020 $ 243,920,065 219,648,939 247,435,865 14,298,411 - 249,978,855 1,170,174 44,934,958 $ 962,153,898 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in January 2024, April 2022, September 2020, and October 2021, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2017 and 2016 was $153,446 and $176,057, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2018 2019 2020 2021 2022 Thereafter $ 124,939 128,358 129,683 128,705 130,389 207,295 Total $ 849,369 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle advertising firm for services on the Generation Wild marketing campaign. The research and strategy phase of the campaign started in Fiscal Year 2016 and the program will extend into Fiscal Year 2019. The majority of the services will occur in Fiscal Year 2017 and 2018. In Fiscal Year 2017, GOCO's expenses on the marketing campaign were approximately $1.3 million. Expected costs for Fiscal Year 2018 are approximately $2.2 million. This contract may be terminated upon advance notice with payment required on any active projects. Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 10 - Pension Plans (continued) Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO recognized pension expense of $12,663 and $11,480 for the Fiscal Years Ended June 30, 2017 and 2016, respectively. Employees are vested on a two-year schedule based on 1,000 hours of service. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2017 and 2016, respectively, forfeitures reduced GOCO’s pension expense by $430 and $169. GOCO contributed $114,761 and $102,162 to the Pension Plan for the Fiscal Years ended June 30, 2017 and 2016, respectively, which approximates the required contribution. As of June 30, 2017, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Financial Statements June 30, 2017 and 2016 Note 11 - Related Parties - State Agencies (continued) Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Expenditures made to CPW are listed in Note 8. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. Note 14 – Unearned Revenue In Fiscal Year 2017, GOCO and the Colorado Health Foundation entered into a grant agreement which allocates $4 million to GOCO over a 4-year period, contingent on meeting certain requirements. These funds will be monitored by the Colorado Health Foundation and should only be used for GOCO’s Inspire initiative on projects approved by the Colorado Health Foundation. GOCO received the first grant payment in Fiscal Year 2017 in the amount of $1 million. GOCO had not yet met the contract requirements or awarded the funds as of June 30, 2017; therefore, these proceeds were classified as “Unearned Revenue” on the Statement of Net Position. - 28 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2017 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 61,900,000 $ 64,463,929 300,000 258,616 (41,383) Total revenues 62,200,000 64,722,545 2,522,545 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 80,425,000 1,447,549 2,196,037 123,500 84,192,086 50,782,305 1,436,930 2,387,489 97,719 54,704,443 29,642,695 10,619 (191,452) 25,781 29,487,643 (Deficiency) excess of revenues over expenditures (21,992,086) 10,018,102 (32,010,188) Fund balance – beginning of year $ 70,497,927 $ 74,974,820 $ 48,505,841 $ 84,992,922 $ 36,487,081 Revenues State Lottery proceeds Investment earnings and miscellaneous income Fund balance – end of year - 30 - $ 2,563,929 4,476,893 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2016 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 61,200,000 $ 63,714,505 300,000 61,500,000 967,734 64,682,239 667,734 3,182,239 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 60,000,000 1,422,399 775,361 26,240 62,224,000 44,934,958 1,287,515 994,327 31,231 47,248,031 15,065,042 134,884 (218,966) (4,991) 14,975,969 Excess of revenues over expenditures (724,000) 17,434,208 18,158,208 Fund balance – beginning of year 71,221,927 57,540,612 (13,681,315) $ 70,497,927 $ 74,974,820 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 31 - $ $ 2,514,505 4,476,893 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to the Required Supplementary Information Note RSI-1 Budgetary Information GOCO budgets are prepared by GOCO staff and approved annually by the Board. The operating budget uses the modified accrual standard of accounting where capital outlays are treated as expenditures and depreciation is not budgeted. The operating budget is based on prior year results and expectations for the next year. Encumbrance accounting is employed by GOCO to account for grants awarded but not yet invoiced. Encumbrances outstanding at year end do not constitute expenditures or liabilities. - 32 - �Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated November 17, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 33 What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance and Other Matters As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Governmental Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. November 17, 2017 Denver, Colorado - 34 - �November 17, 2017 Members of the State Board of the Great Outdoors Colorado Trust Fund and Legislative Audit Committee Great Outdoors Colorado Trust Fund Denver, Colorado We have audited the financial statements of Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the year ended June 30, 2017, and have issued our report thereon dated November 17, 2017. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our letter dated May 4, 2017, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of its respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of GOCO solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. - 35 What inspires you, inspires us. Let’s talk. | eidebailly.com 7001 E. Belleview Ave., Ste. 700 | Denver, CO 80237-2733 | TF 866.740.4100 | T 303.770.5700 | F 303.770.7581 | EOE �Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by GOCO is included in Note 2 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2017. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. We did not identify any sensitive accounting estimates affecting the financial statements. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting GOCO’s financial statements relate to: The disclosure of Cash and Investments in Note 4, Lottery Proceeds Receivable in Note 5, Note Receivable in Note 6, Authorized Grants and Expended Grants in Note 8, Commitments and Contingencies in Note 9, and Related Parties – State Agencies in Note 11. The financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. - 36 - �Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. There were no corrected or uncorrected misstatements noted based on procedures performed. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management that are included in the management representation letter dated November 17, 2017. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with GOCO, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, business conditions affecting the entity, and business plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as GOCO’s auditors. Other Matters We applied certain limited procedures to the management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. - 37 - �This report is intended solely for the information and use of the GOCO Board, and management of GOCO and is not intended to be and should not be used by anyone other than these specified parties. However, upon release by the Legislative Audit Committee this report is a public document. Denver, Colorado - 38 - � https://cpw.cvlcollections.org/files/original/babdd7e2dc1a6831a70a204baf3e6543.pdf e525b3451979248e6ca1fc751e0505fb PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Fiscal Years Ended June 30, 2016 and 2015 �MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND 2016 MEMBERS Heather Carroll – Chair Katie Cattanach Hollie Velasquez-Horvath Jenn Dice Tony Lewis Tom Burke Alan Schwartz Chana Reed Jody Rogers Dave Palenchar Jason Brinkley Linda Strand Jacy Rock Karma Giulianelli Bob Randall John Howard Bill Kane �October 7, 2016 Members of the State Board of the Great Outdoors Colorado Trust Fund We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the year ended June 30, 2016. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Sincerely, EKS&H LLLP �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 2 Independent Auditors’ Report .................................................................................................................. 5 Management’s Discussion and Analysis .................................................................................................. 7 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2016 ................. 12 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2015 ................. 13 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2016............................... 14 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2015............................... 15 Notes to Financial Statements .................................................................................................... 16 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2016 ..................................... 31 Budgetary Comparison Schedule – For the Year Ended June 30, 2015 ..................................... 32 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 33 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund ............................................................................................................. 35 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2016 and 2015 AUTHORITY, PURPOSE, AND SCOPE The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) contracted with EKS&H LLLP (“Contract Auditors”) to perform a financial and compliance audit of its Fiscal Year 2016 financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We performed our audit work during the period from June 2016 through October 2016. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to review GOCO’s compliance with appropriate state and federal laws and rules and regulations that could have a material effect on GOCO’s financial statements; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings, as applicable. AUDITORS’ OPINIONS AND REPORTS An independent auditors’ report on the financial statements of GOCO, dated October 7, 2016, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2016, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated October 7, 2016, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2016 and 2015 The Great Outdoors Colorado Trust Fund and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2016 was the twenty-third year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2002, House Bill 1250 extended the termination date of Lottery to July 1, 2024, thus continuing funding for GOCO through June 30, 2024. As of June 30, 2016, the State Board that oversees GOCO consists of two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (the “State”). During Fiscal Year 2016, GOCO had a permanent staff of 15 and received $63.7 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2016. During Fiscal Year 2015, GOCO had a permanent staff of 13 and received $62.0 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2015. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2016 and 2015 GOCO Grants Cumulative through Fiscal Year 2016 (in thousands) Grants Authorized Amount % Funding Purpose Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks Non-categorized – Discretionary Total $ 267,363 24.6% 258,337 Grants Expended Amount % 243,920 25.4% 23.7 219,649 22.9 282,653 26.0 247,436 25.7 279,223 25.7 249,979 26.0 1,170 N/A 1,170 N/A 962,154 100.0% $ 1,088,746 100.0% $ $ Cumulative Difference between Grants Authorized and Expended $ 126,592 Source: Data provided by GOCO The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. Cumulative grants authorized for the competitive matching grants to local governments and for open lands and parks purpose moved closer to 25 percent from Fiscal Year 2015 to Fiscal Year 2016. Cumulative grants expended for all but the competitive matching grants to local governments for open lands and parks purpose moved closer to 25 percent from Fiscal Year 2015 to Fiscal Year 2016. GOCO Grants Authorized Cumulative Trend for the Previous Five Years Grants Authorized % 2014 2015 2012 2013 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.5% 22.0 24.9% 22.9 24.8% 23.1 24.6% 23.8 24.6% 23.7 0.1% 1.7% 26.5 25.7 25.6 25.4 26.0 (0.5)% 27.0 26.5 26.5 26.2 25.7 (1.3)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -3- 2016 Five-Year Change Funding Purpose �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2016 and 2015 GOCO Grants Expended Cumulative Trend for the Previous Five Years Grants Expended % 2014 2015 2016 Five-Year Change 25.5% 22.4 25.4% 22.9 (0.1)% 1.1% 26.6 26.4 25.7 (1.0)% 25.9 25.6 25.7 26.0 0.0% 100.0% 100.0% 100.0% 100.0% Funding Purpose 2012 2013 Purpose 1 - Wildlife Purpose 2 - Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.5% 21.8 25.7% 21.8 25.5% 22.3 26.7 26.6 26.0 100.0% Source: Data provided by GOCO -4- �INDEPENDENT AUDITORS’ REPORT Members of the State Board of the Great Outdoors Colorado Trust Fund REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2016 and 2015, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. -5- �Members of the State Board of the Great Outdoors Colorado Trust Fund We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2016 and 2015, and the respective changes in net financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 7 through 11 and 31 through 32 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated October 7, 2016, on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. EKS&H LLLP October 7, 2016 Denver, Colorado -6- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2016 and 2015 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the fiscal years ended June 30, 2016 and 2015. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 12. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2016, Fiscal Year 2015, and Fiscal Year 2014. Fiscal Year Ended June 30, 2015 2014 2016 Lottery revenues Grant expenditures $ 63,714,505 $ 44,934,958 $ 61,992,978 $ 50,803,068 $ 60,321,412 $ 41,410,211 2016/2015 Variance $ 1,721,527 $ (5,868,110) 2015/2014 Variance $ $ 1,671,566 9,392,857 2016 GOCO received its maximum allowable Lottery proceeds for the year of approximately $63.7 million, per the constitutional cap. This represents an approximate $1.7 million increase over Fiscal Year 2015 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures decreased by $5.9 million from Fiscal Year 2015. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2016 expenditures were lower than the average primarily due to a decrease in project completion of competitive grants for open space. 2015 GOCO received its maximum allowable Lottery proceeds for the year of approximately $62.0 million, per the constitutional cap. This represents an approximate $1.7 million increase over Fiscal Year 2014 in Lottery proceeds to GOCO due to an increase in the Denver CPI. Grant expenditures increased by $9.4 million from Fiscal Year 2014. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2015 expenditures were slightly higher than the average. -7- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2016 and 2015 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO:  The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status.  The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the Lottery. Net Lottery proceeds are distributed as follows:    40% to the Conservation Trust Fund, 10% to the Colorado Parks and Wildlife (“CPW”), 50% to GOCO up to the constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($63.7 million and $62.0 million in Fiscal Year 2016 and Fiscal Year 2015, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2016 and Fiscal Year 2015. Government-Wide Statements Statements of Net Position The following table reflects the condensed statements of net position as of June 30, 2016, 2015, and 2014. 2016 June 30, 2015 2014 $ 95,533,739 78,361 95,612,100 $ 74,429,953 92,350 74,522,303 $ 53,143,814 65,839 53,209,653 Liabilities 20,558,919 16,889,341 5,044,350 Net position Invested in capital assets Restricted Unrestricted 78,361 74,974,820 92,350 328,398 57,212,214 65,839 550,000 47,549,464 $ 75,053,181 $ 57,632,962 $ 48,165,303 Current and other assets Capital assets, net Total assets Total net position -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2016 and 2015 Government-Wide Statements (continued) Statements of Net Position (continued) 2016 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $27.1 million during Fiscal Year 2016. Lottery proceeds receivable decreased to $7.9 million at June 30, 2016 from $13.9 million at June 30, 2015. The decrease in the receivable is due to the receipt of a large distribution of third quarter Lottery proceeds in June 2016. GOCO reached the constitutional cap amount in May for Fiscal Year 2016 and reached the constitutional cap amount in June for Fiscal Year 2015. As of June 30, 2016, liabilities increased by $3.7 million from June 30, 2015. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes an accrual for the January 2016 through June 2016 bills for Parks and Wildlife investments for Fiscal Year 2016. The amount accrued for Wildlife monthly bills and land transactions was $1.8 million less in Fiscal Year 2016. The amount accrued for Parks monthly bills was $3.3 million more in Fiscal Year 2016. The increase in the Parks accrual is largely due to increased Parks spending on capital projects. Open Space purposes had approximately $1.4 million more accrued in Fiscal Year 2016. In addition, $800 thousand more in local government grants was accrued in Fiscal Year 2016. 2015 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $17.9 million during Fiscal Year 2015. Lottery proceeds receivable increased to $13.9 million at June 30, 2015 from $10.5 million at June 30, 2014. The increase in the receivable is due to the increase in the constitutional cap and due to timing of Lottery revenues earned throughout the year. GOCO reached the constitutional amount in June for Fiscal Year 2015 and reached the constitutional amount in May for Fiscal Year 2014. As of June 30, 2015, liabilities increased by $11.8 million from June 30, 2014. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes an accrual for the December 2014 through June 2015 bills for Parks and Wildlife investments for Fiscal Year 2015. The amount accrued for Wildlife monthly bills and land transactions was $8.2 million more in Fiscal Year 2015. The amount accrued for Parks monthly bills was $2.8 million more in Fiscal Year 2015. The increase in the Parks and Wildlife accruals is largely due to a delay in the CPW billing cycle while the agency undergoes a new accounting system implementation. Open Space purposes had approximately $15 thousand more accrued in Fiscal Year 2015. In addition, $840 thousand more in local government grants was accrued in Fiscal Year 2015. -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2016 and 2015 Government-Wide Statements (continued) Statements of Net Position (continued) 2015 (continued) Net Position-Restricted represents the remaining funds received in Fiscal Year 2013 from a $750 thousand grant from the Colorado Health Foundation. These funds were restricted, and the remaining amount was utilized in Fiscal Year 2016 to reimburse these awards. The approximate $220 thousand reduction in restricted fund balances in Fiscal Year 2015 is due to funds being expended. Statements of Activities The following table reflects the condensed statements of activities for the Fiscal Years ended June 30, 2016, 2015, and 2014. Fiscal Years Ended June 30, 2016 2015 2014 Revenue Lottery revenue Miscellaneous income and investment earnings Total revenue $ 63,714,505 $ 61,992,978 $ 60,321,412 967,734 64,682,239 571,627 62,564,605 470,966 60,792,378 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 44,934,958 1,287,515 1,039,547 47,262,020 50,803,068 1,232,271 1,061,607 53,096,946 41,410,211 1,193,629 625,668 43,229,508 Change in net position 17,420,219 9,467,659 17,562,870 Beginning net position 57,632,962 48,165,303 30,602,433 Ending net position $ 75,053,181 $ 57,632,962 $ 48,165,303 2016 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2016 increased by approximately $396 thousand as a result of an increase of approximately $58 thousand in actual cash received for earnings and a higher unrealized gain in Fiscal Year 2016 of approximately $359 thousand compared to Fiscal Year 2015. Grant expenditures in Fiscal Year 2016 decreased by $5.9 million from Fiscal Year 2015 primarily due to a decrease in project completion of competitive grants for open space. Grant expenditures are made on a reimbursement basis. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2016 and 2015 Government-Wide Statements (continued) Statements of Activities (continued) 2015 Revenue was consistent with Lottery net proceeds reaching the constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2015 increased by approximately $100 thousand as a result of an increase of approximately $200 thousand in actual cash received for earnings offset by lower unrealized gain in Fiscal Year 2015 of approximately $100 thousand compared to Fiscal Year 2014. Grant expenditures in Fiscal Year 2015 increased by $9.4 million from Fiscal Year 2014. Grant expenditures are made on a reimbursement basis. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $61.9 million in revenue from the Lottery, which is less than the constitutional cap projection for Fiscal Year 2017. Although the constitutional cap has historically been met, growth in Lottery sales has been decreasing since 2013, and discussions with Lottery staff indicate that this trend may continue and the cap may not be met in future years. Also, GOCO is budgeting $2,985,000 for operating expenditures. This amount is classified as follows: Personnel services and benefits Operating expenditures Capital outlay - 11 - $ 1,447,549 1,413,951 123,500 $ 2,985,000 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2016 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 86,549,551 7,887,187 1,000,000 97,001 - $ 78,361 $ 86,549,551 7,887,187 1,000,000 97,001 78,361 Total assets $ 95,533,739 $ 78,361 $ 95,612,100 $ 20,449,327 82,887 26,705 20,558,919 $ - $ 20,449,327 82,887 26,705 20,558,919 (74,974,820) (74,974,820) - 78,361 74,974,820 78,361 74,974,820 $ 75,053,181 $ 75,053,181 Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities Commitments and contingencies Fund Balances/Net Position Fund balances Unrestricted Total fund balances Total liabilities and fund balances 74,974,820 74,974,820 $ 95,533,739 Net position Invested in capital assets Unrestricted Total net position See notes to financial statements. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2015 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 59,447,836 13,912,352 1,000,000 69,765 - $ 92,350 $ 59,447,836 13,912,352 1,000,000 69,765 92,350 Total assets $ 74,429,953 $ 92,350 $ 74,522,303 $ 16,792,167 57,022 40,152 16,889,341 $ - $ 16,792,167 57,022 40,152 16,889,341 (328,398) (57,212,214) (57,540,612) - 92,350 328,398 57,212,214 92,350 328,398 57,212,214 $ 57,632,962 $ 57,632,962 Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities Commitments and contingencies Fund Balances/Net Position Fund balances Restricted Unrestricted Total fund balances Total liabilities and fund balances 328,398 57,212,214 57,540,612 $ 74,429,953 Net position Invested in capital assets Restricted Unrestricted Total net position See notes to financial statements. - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2016 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 44,934,958 1,287,515 994,327 31,231 47,248,031 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 45,220 (31,231) 13,989 $ 44,934,958 1,287,515 1,039,547 47,262,020 - 63,714,505 63,714,505 Net program revenues (expenses) 16,452,485 General revenues Miscellaneous income Investment earnings Total general revenues 6,130 961,604 967,734 - 6,130 961,604 967,734 Excess (deficiency) of expenditures over revenues Change in net position 17,434,208 - (17,434,208) 17,420,219 17,420,219 Fund balance/net position – beginning of the year 57,540,612 92,350 57,632,962 Fund balance/net position – end of the year $ 74,974,820 78,361 $ 75,053,181 See notes to financial statements. - 14 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2015 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 50,803,068 1,232,271 1,013,086 75,032 53,123,457 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 48,521 (75,032) (26,511) $ 50,803,068 1,232,271 1,061,607 53,096,946 - 61,992,978 61,992,978 Net program revenues (expenses) 8,896,032 General revenues Miscellaneous income Investment earnings Total general revenues 51,471 520,156 571,627 - 51,471 520,156 571,627 Excess (deficiency) of expenditures over revenues Change in net position 9,441,148 - (9,441,148) 9,467,659 9,467,659 Fund balance/net position – beginning of the year 48,099,464 65,839 48,165,303 Fund balance/net position – end of the year $ 57,540,612 92,350 $ 57,632,962 See notes to financial statements. - 15 - $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado State Lottery (“State Lottery” or “Lottery”) to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Years Asset Type Furniture and fixtures Computer hardware and software Equipment 10 3 5-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position GOCO’s general fund balances are classified as unassigned. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the general fund. Net position is presented in the following categories: Invested in capital assets – consists of capital assets net of accumulated depreciation Restricted – consists of the net position that is restricted by a grantor to reimburse awards under GOCO’s school play-yard initiative. There were no restricted amounts as of June 30, 2016. Unrestricted – consists of the remaining net position that is available for unrestricted use State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Colorado Parks and Wildlife, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2016 and 2015 was approximately $63.7 million and $62.0 million, respectively, which was the maximum amount allowable under the State Constitution. GOCO has estimated Lottery proceeds to be $61.9 million, which is less than the maximum allowable of $64.5 million, for Fiscal Year 2017 due to an expected downward trend in the growth of Lottery sales. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $78,361 and $92,350 adjustments to capital assets as of June 30, 2016 and 2015, respectively, represent the capital assets of GOCO, net of accumulated depreciation. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2016 2015 Capital outlay Depreciation expense Loss on disposal Net adjustment to decrease (increase) net changes in fund balances - total governmental fund to arrive at change in net position of governmental activities $ (31,231) 41,583 3,637 $ (75,032) 39,968 8,553 $ 13,989 $ (26,511) Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 4 - Cash Deposits and Investments (continued) Cash Deposits (continued) As of June 30, 2016, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2016 Carrying Balance Bank Balance Cash on hand Insured deposits $ 232,155 $ 119 94,120 $ 232,155 $ 94,239 As of June 30, 2015, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2015 Carrying Balance Bank Balance Cash on hand Insured deposits $ 137,773 $ 86 44,597 $ 137,773 $ 44,683 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include:       Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO invests its net Lottery proceeds with the State Treasurer. The State Treasurer has invested the monies held in the Trust Fund in the State Treasurer’s pooled cash account. GOCO does not control investment decisions associated with this account, and GOCO’s monies represent approximately 1% of the pooled cash account. The State of Colorado Comprehensive Annual Financial Report provides disclosures regarding investment risk for GOCO’s investments held by the State Treasurer in the pooled cash account. The State Treasurer categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The State Treasurer has provided the following recurring fair value measurements related to its pooled cash account in which GOCO monies are held as of June 30, 2016 (unaudited): Level 2 Level 1 U.S. government securities Commercial paper Corporate bonds Asset-backed securities Mortgages Mutual funds Level 3 Total $ 230,000,000 $ 3,633,084,620 846,606,464 1,668,441,771 1,025,405,593 4,919,040 - $ - $ 3,633,084,620 846,606,464 1,668,441,771 1,025,405,593 4,919,040 230,000,000 $ 230,000,000 $ 7,178,457,488 $ - $ 7,408,457,488 Summary Total cash deposits and investments are as follows: June 30, 2016 Cash deposits Investments $ 94,239 86,455,312 $ 86,549,551 - 22 - 2015 $ 44,683 59,403,153 $ 59,447,836 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 4 - Cash Deposits and Investments (continued) Investment Earnings Investment earnings are composed of the following: June 30, 2016 Investment income Net unrealized gain on investments held by the State 2015 $ 589,774 371,830 $ 507,432 12,724 $ 961,604 $ 520,156 Note 5 - Lottery Proceeds Receivable As of June 30, 2016 and 2015, GOCO had distributions owed from the Lottery amounting to $7,887,187 and $13,912,352, respectively. For the receivable as of June 30, 2016, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2016 and May 2016, the month in which GOCO reached the constitutional cap (Note 2). For the receivable as of June 30, 2015, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2015, May 2015 and June 2015, the month in which GOCO reached the constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. Note 6 - Note Receivable On June 9, 2006, GOCO entered into a zero percent interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property cannot be recorded until the COPs are paid in full. Accordingly, the easement has been placed in escrow and will remain there until the COPs have been paid in full by the City, estimated to be in 2018. Upon the due date of the note, the note will be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Non-exchange Transactions, the note is considered an advance until these requirements are met. At the time the requirements are met, GOCO will reclassify the note to grant expense. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2016 follows: Balance at July 1, 2015 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2016 $ 46,870 103,229 31,033 14,560 195,692 (103,342) $ 7,224 24,007 31,231 (41,583) $ (13,639) (7,684) (21,323) 17,686 $ 40,455 119,552 31,033 14,560 205,600 (127,239) $ 92,350 $ (10,352) $ (3,637) $ 78,361 Less: accumulated depreciation Total capital assets, net Additions An analysis of the changes in capital assets for the year ended June 30, 2015 follows: Balance at July 1, 2014 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2015 $ 70,782 134,755 31,033 14,560 251,130 (185,291) $ 75,032 75,032 (39,968) $ (23,912) (106,558) (130,470) 121,917 $ 46,870 103,229 31,033 14,560 195,692 (103,342) $ 65,839 $ 35,064 $ (8,553) $ 92,350 Less: accumulated depreciation Total capital assets, net Additions - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 8 - Authorized Grants and Expended Grants The following is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2016 and 2015: Grants Authorized (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2015 Transfers/ Additions $ 252,583,491 244,275,860 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary 15,280,585 15,280,185 $ (501,031) (1,219,220) $ 267,363,045 258,336,825 260,708,745 22,881,264 (937,057) 282,652,952 268,408,359 1,170,174 10,850,000 - (35,851) - 279,222,508 1,170,174 (2,693,159) $ 1,088,745,504 $1,027,146,629 Funding Purpose $ Transfers/ Deletions Cumulative Authorized Grants at June 30, 2016 $ Cumulative Authorized Grants at June 30, 2014 64,292,034 $ Transfers/ Additions $ 241,008,429 225,264,816 $ 11,800,000 19,654,712 Transfers/ Deletions $ Cumulative Authorized Grants at June 30, 2015 (224,938) (643,668) $ 252,583,491 244,275,860 248,892,023 14,111,187 (2,294,465) 260,708,745 258,679,265 1,170,174 10,075,845 - (346,751) - 268,408,359 1,170,174 (3,509,822) $ 1,027,146,629 $ 975,014,707 $ - 25 - 55,641,744 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 8 - Authorized Grants and Expended Grants (continued) Grants Expended Cumulative Expended Grants at June 30, 2015 Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 233,202,445 205,096,032 242,069,845 Transfers/ Additions $ 235,680,444 1,170,174 $ 917,218,940 $ Cumulative Expended Grants at June 30, 2014 Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 220,851,204 192,519,980 230,658,949 221,215,565 1,170,174 $ 866,415,872 - 26 - 10,717,620 14,552,907 5,366,020 $ 243,920,065 219,648,939 247,435,865 14,298,411 - 249,978,855 1,170,174 44,934,958 $ 962,153,898 Transfers/ Additions $ $ Cumulative Expended Grants at June 30, 2016 Cumulative Expended Grants at June 30, 2015 12,351,241 12,576,052 11,410,896 $ 233,202,445 205,096,032 242,069,845 14,464,879 - 235,680,444 1,170,174 50,803,068 $ 917,218,940 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in September 2016, March 2017, August 2017, and June 2017, respectively. GOCO entered into a new lease for facilities at a different location beginning September 2016 and expiring in January 2024. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2016 and 2015 was $176,057 and $160,836, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2017 2018 2019 2020 2021 Thereafter $ 112,202 114,543 116,999 120,302 123,606 334,204 Total $ 921,856 Contractual Obligation During Fiscal Year 2016, GOCO signed a multi-year contract with Sukle Advertising & Design for services on a marketing campaign. The research and strategy phase of the campaign started in Fiscal Year 2016 and extended into Fiscal Year 2017. The remainder of the services will occur in Fiscal Year 2017, and may continue into Fiscal Year 2018. In Fiscal Year 2016, GOCO's expenses on the marketing campaign were approximately $102,000. Expected costs for Fiscal Years 2017 and 2018 range from $265,000 to $591,000. This contract may be terminated upon advance notice with payment required on any active projects. Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 10 - Pension Plans (continued) Defined Contribution Pension Plan (continued) Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO recognized pension expense of $11,480 and $11,356 for the Fiscal Years Ended June 30, 2016 and 2015, respectively. Employees are vested on a two-year schedule based on 1,000 hours of service. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any pension plan administrative expenses and then to reduce any employer contribution. For the Fiscal Years ended June 30, 2016 and 2015, respectively, forfeitures reduced GOCO’s pension expense by $169 and $12,170. GOCO contributed $102,162 and $79,668 to the Pension Plan for the Fiscal Years ended June 30, 2016 and 2015, respectively, which approximates the required contribution. As of June 30, 2016, GOCO had no liability to the Pension Plan. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2016 and 2015 Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S., that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. - 29 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2016 Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Original and Final Budget Actual $ 61,200,000 $ 63,714,505 300,000 61,500,000 967,734 64,682,239 667,734 3,182,239 60,000,000 1,422,399 775,361 26,240 62,224,000 44,934,958 1,287,515 994,327 31,231 47,248,031 15,065,042 134,884 (218,966) (4,991) 14,975,969 (724,000) 17,434,208 18,158,208 71,221,927 57,540,612 (13,681,315) $ 70,497,927 $ 74,974,820 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures (Deficiency) excess of revenues over expenditures Fund balance – beginning of year Fund balance – end of year Variance Favorable (Unfavorable) - 31 - $ $ 2,514,505 4,476,893 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2015 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 61,500,000 $ 61,992,978 260,000 61,760,000 571,627 62,564,605 311,627 804,605 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 50,000,000 1,314,223 744,777 123,000 52,182,000 50,803,068 1,232,271 1,013,086 75,032 53,123,457 (803,068) 81,952 (268,309) 47,968 (941,457) Excess of revenues over expenditures 9,578,000 9,441,148 (136,852) Fund balance – beginning of year 61,643,927 48,099,464 (13,544,463) $ 71,221,927 $ 57,540,612 $ (13,681,315) Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 32 - $ 492,978 �INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the State Board of the Great Outdoors Colorado Trust Fund We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audit contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the Fiscal Year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated October 7, 2016. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 33 - �Members of the State Board of the Great Outdoors Colorado Trust Fund COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Governmental Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. EKS&H LLLP October 7, 2016 Denver, Colorado - 34 - �REQUIRED COMMUNICATIONS TO THE MEMBERS OF THE STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Members of the State Board of the Great Outdoors Colorado Trust Fund We have audited the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the year ended June 30, 2016. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Governmental Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our contract dated May 27, 2016. Professional standards also require that we communicate to you the following information related to our audit. SIGNIFICANT AUDIT FINDINGS Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by GOCO are described in Note 2 to the financial statements. GOCO adopted new accounting guidance, GASB Statement No. 72, Fair Value Measurement and Application, in Fiscal Year 2016. The application of existing policies was not changed during Fiscal Year 2016. We noted no transactions entered into by GOCO during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Management’s use of estimates is disclosed in the notes to financial statements. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures in the financial statements are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. - 35 - �Members of the State Board of the Great Outdoors Colorado Trust Fund Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no such audit adjustments for the year ended June 30, 2016. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from GOCO’s management that are included in the management representation letter dated October 7, 2016. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to GOCO’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consulting accountant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as GOCO’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. OTHER MATTERS We applied certain limited procedures to management’s discussion and analysis and budgetary comparison information, which is required supplementary information (“RSI”) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. - 36 - �Members of the State Board of the Great Outdoors Colorado Trust Fund This information is intended solely for the information and use of the GOCO Board and management and others within GOCO and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record upon release by the GOCO Board. EKS&H LLLP October 7, 2016 Denver, Colorado - 37 - � https://cpw.cvlcollections.org/files/original/270adda70a28254620d06312c4d69d39.pdf cea5ad31b3045588d2ecc01430a00907 PDF Text Text LIMITATIONS ON DISCLOSURE OF INFORMATION CONTAINED IN THIS DOCUMENT The enclosed report is being distributed to you at this time for your information in accordance with Colorado Revised Statutes (CRS). SECTION 2-3-103 (2) states in part: All reports shall be open to public inspection except for that portion of any report containing recommendations, comments, and any narrative statements which is released only upon the approval of a majority vote of the committee (emphasis supplied). SECTION 2-3-103.7 (1) states in part: Any state employee or other individual acting in an oversight role as a member of a committee, board, or commission who willfully and knowingly discloses the contents of any report prepared by, or at the direction of, the Office of the State Auditor prior to the release of such report by a majority vote of the committee as provided in Section 2-3-103 (2) is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than five hundred dollars (emphasis supplied). �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2015 and 2014 AUDIT | TAX | CONSULTING �LEGISLATIVE AUDIT COMMITTEE 2015 MEMBERS Senator Lucia Guzman Chair Representative Dan Nordberg Vice-Chair Senator Chris Holbert Senator Cheri Jahn Senator Tim Neville Representative Dianne Primavera Representative Su Ryden Representative Lori Saine OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Crystal Dorsey Audit Manager EKS&H LLLP Contract Auditors AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.STATE.CO.US/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 1522F WHEN REQUESTING THIS REPORT �November 17, 2015 Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the year ended June 30, 2015. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, EKS&H LLLP �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 2 Disposition of Prior Audit Finding and Recommendation ....................................................................... 5 Independent Auditors’ Report .................................................................................................................. 6 Management’s Discussion and Analysis .................................................................................................. 8 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2015 ................. 14 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2014 ................. 15 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2015............................... 16 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2014............................... 17 Notes to Financial Statements .................................................................................................... 18 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2015 ..................................... 32 Budgetary Comparison Schedule – For the Year Ended June 30, 2014 ..................................... 33 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 34 Required Communications to the Members of the State Board of Great Outdoors Colorado Trust Fund and the Legislative Audit Committee ................................................. 36 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2015 and 2014 AUTHORITY, PURPOSE, AND SCOPE The Fiscal Year 2015 audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) was completed under the authority of Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of GOCO, and Section 2-3-103, C.R.S., which authorizes the State Auditor to conduct annual audits of political subdivisions as required by law. The State Auditor contracted with EKS&H LLLP to conduct this audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We performed our audit work during the period from June 2015 through November 2015. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to review GOCO’s compliance with appropriate state and federal laws and rules and regulations that could have a material effect on GOCO’s financial statements; (c) to prepare audit findings and recommendations for improvements in internal controls, as applicable; and (d) to evaluate progress in implementing prior audit findings. AUDITORS’ OPINIONS AND REPORTS An independent auditors’ report on the financial statements of GOCO, dated November 17, 2015, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2015, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated November 17, 2015, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. SUMMARY OF PROGRESS IN IMPLEMENTING PRIOR AUDIT RECOMMENDATIONS The audit report for the Fiscal Year Ended June 30, 2014, included one recommendation, and GOCO agreed to implement the recommendation by June 2015. We determined through our testwork that the recommendation’s status was implemented and ongoing as of Fiscal Year 2015. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2015 and 2014 The Great Outdoors Colorado Trust Fund (“GOCO”) and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2015 was the twenty-second year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2002, House Bill 1250 extended the termination date of Lottery to July 1, 2024, thus continuing funding for GOCO through June 30, 2024. As of June 30, 2015, the State Board that oversees GOCO consists of two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2015, GOCO had a permanent staff of 13 and received $62.0 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2015. During Fiscal Year 2014, GOCO had a permanent staff of 12 and received $60.3 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2014. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2015 and 2014 GOCO Grants Cumulative through Fiscal Year 2015 (in thousands) Funding Purpose Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks Grants Authorized Amount % Grants Expended Amount % $ 252,583 24.6% $ 233,203 25.5% 244,276 23.8 205,096 22.4 260,709 25.4 242,070 26.4 268,408 26.2 235,680 25.7 1,170 N/A 1,170 N/A Non-categorized – Discretionary Total $1,027,146 100.0% $ 917,219 100.0% Cumulative Difference between Grants Authorized and Expended $ 109,927 Source: Data provided by GOCO The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. Cumulative grants authorized for all but the Wildlife purpose moved closer to 25 percent from Fiscal Year 2014 to Fiscal Year 2015. Cumulative grants expended for all but the Competitive matching grants to local governments for open lands and parks moved closer to 25 percent or stayed the same from Fiscal Year 2014 to Fiscal Year 2015. GOCO Grants Authorized Cumulative Trend for the Previous Five Years FiveYear Change Funding Purpose 2011 Grants Authorized % 2012 2013 2014 Purpose 1 - Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 24.3% 23.1 24.5% 22.0 24.9% 22.9 24.8% 23.1 24.6% 23.8 0.3% 0.7% 25.9 26.5 25.7 25.6 25.4 (0.5)% 26.7 27.0 26.5 26.5 26.2 (0.5)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -3- 2015 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2015 and 2014 GOCO Grants Expended Cumulative Trend for the Previous Five Years FiveYear Change Funding Purpose 2011 Grants Expended % 2012 2013 2014 Purpose 1 - Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.0% 22.2 25.5% 21.8 25.7% 21.8 25.5% 22.3 25.5% 22.4 0.5% 0.2% 26.7 26.7 26.6 26.6 26.4 (0.3)% 26.1 26.0 25.9 25.6 25.7 (0.4)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -4- 2015 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Disposition of Prior Audit Finding and Recommendation For the Years Ended June 30, 2015 and 2014 Below is the recommendation included in the audit report for the year ended June 30, 2014, and the disposition as of June 30, 2015: Recommendation No. 1: The GOCO Board should adopt a formal policy to determine the optimal amount of funds to reserve for future expenditures and implement a process for regularly evaluating historical expenditure and cash balance trends compared to grant awards and cash balances and revise estimates and projections, as appropriate. In establishing the optimal funds to reserve and ways to maximize grant awards, GOCO should evaluate estimated future expenditures by year based on the awards outstanding, in addition to considering projected lottery proceeds, amount of awards that have been made ahead of receiving lottery proceeds and substantially equal requirements, and other appropriate metrics. Such analysis should be included as part of the annual Spending Plan as well as the annual evaluation of the status of the 5-Year Strategic Plan. Response and Disposition: GOCO agreed to implement the recommendation by June 2015. We determined through our testwork that the recommendation’s implementation status was “implemented and ongoing” as of Fiscal Year 2015. -5- �INDEPENDENT AUDITORS’ REPORT Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2015 and 2014, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. -6- �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2015 and 2014, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 8 through 13 and 32 through 33 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2015 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. EKS&H LLLP November 17, 2015 Denver, Colorado -7- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the fiscal years ended June 30, 2015 and 2014. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 14. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2015, Fiscal Year 2014, and Fiscal Year 2013. Fiscal Year Ended June 30, 2014 2013 2015 Lottery revenues Grant expenditures $ 61,992,978 $ 50,803,068 $ 60,321,412 $ 41,410,211 $ 59,171,757 $ 52,383,167 2015/2014 Variance 2014/2013 Variance $ $ $ 1,149,655 $ (10,972,956) 1,671,566 9,392,857 2015 GOCO received its maximum allowable Lottery proceeds for the year of approximately $62.0 million, per the Constitutional cap. This represents an approximate $1.7 million increase over Fiscal Year 2014 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures increased by $9.4 million from Fiscal Year 2014. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2015 expenditures were slightly higher than the average. 2014 GOCO received its maximum allowable Lottery proceeds for the year of approximately $60.3 million, per the Constitutional cap. This represents an approximate $1.1 million increase over Fiscal Year 2013 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures decreased by $11 million from Fiscal Year 2013. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2014 expenditures were lower than the average. -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO:  The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status.  The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows:    40% to the Conservation Trust Fund, 10% to the Division of Parks and Outdoor Recreation (“DPOR”), 50% to GOCO up to the Constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($62.0 million and $60.3 million in Fiscal Year 2015 and Fiscal Year 2014, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2015 and Fiscal Year 2014. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2015, 2014, and 2013. June 30, 2015 2014 2013 Current and other assets Capital assets, net Total assets $ 74,429,953 92,350 74,522,303 $ 53,143,814 65,839 53,209,653 $ 40,194,662 37,214 40,231,876 Liabilities 16,889,341 5,044,350 9,629,443 Net position Invested in capital assets Restricted Unrestricted 92,350 328,398 57,212,214 65,839 550,000 47,549,464 37,214 750,000 29,815,219 $ 57,632,962 $ 48,165,303 $ 30,602,433 Total net position -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 Government-Wide Statements (continued) Statement of Net Position (continued) 2015 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $17.9 million during Fiscal Year 2015. Lottery proceeds receivable increased to $13.9 million at June 30, 2015 from $10.5 million at June 30, 2014. The increase in the receivable is due to the increase in the Constitutional cap and due to timing of Lottery revenues earned throughout the year. GOCO reached the Constitutional amount in June for Fiscal Year 2015 and reached the Constitutional amount in May for Fiscal Year 2014. As of June 30, 2015, liabilities increased by $11.8 million from June 30, 2014. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes an accrual for the December 2014 through June 2015 bills for Parks and Wildlife investments for Fiscal Year 2015. The amount accrued for Wildlife monthly bills and land transactions was $8.2 million more in Fiscal Year 2015. The amount accrued for Parks monthly bills was $2.8 million more in Fiscal Year 2015. The increase in the Parks and Wildlife accruals is largely due to a delay in the CPW billing cycle while the agency undergoes a new accounting system implementation. Open Space purposes had approximately $15 thousand more accrued in Fiscal Year 2015. In addition, $840 thousand more in local government grants was accrued in Fiscal Year 2015. Net Position-Restricted represents the remaining funds received in Fiscal Year 2013 from a $750 thousand grant from the Colorado Health Foundation. These funds are restricted and the remaining amount will be utilized in Fiscal Year 2016 to reimburse these awards. The approximate $220 thousand reduction in restricted fund balances in Fiscal Year 2015 is due to funds being expended. 2014 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $12.4 million during Fiscal Year 2014. Lottery proceeds receivable slightly increased to $10.5 million at June 30, 2014 from $10 million at June 30, 2013. The increase in the receivable is due to the increase in the Constitutional cap. Lottery proceeds are earned throughout the year. GOCO reached the Constitutional amount in May in both Fiscal Year 2014 and Fiscal Year 2013. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 Government-Wide Statements (continued) Statement of Net Position (continued) 2014 (continued) As of June 30, 2014, liabilities decreased by $4.6 million from June 30, 2013. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by CPW. The amount includes the June 2014 bill for Wildlife investments for Fiscal Year 2014 and the March through June 2014 bills for the Parks investments. The amount accrued for Wildlife monthly bills and land transactions was $1.3 million less in Fiscal Year 2014. The amount accrued for Parks monthly bills was $800 thousand more in Fiscal Year 2014. Open Space purposes had approximately $3.53 million less in land transactions accrued in Fiscal Year 2014. In addition, $500 thousand less in local government grants was accrued in Fiscal Year 2014. Net Position-Restricted increased in Fiscal Year 2013 due to GOCO receiving a $750 thousand grant from the Colorado Health Foundation. These funds are restricted and were required to be utilized in Fiscal Years 2014, 2015, and 2016 to reimburse these awards. The $200 thousand reduction in restricted fund balances in Fiscal Year 2014 is due to funds being expended. - 11 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 Government-Wide Statements (continued) Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2015, 2014, and 2013. Fiscal Years Ended June 30, 2015 2014 2013 Revenue Lottery revenue Miscellaneous income and investment earnings Total revenue $ 61,992,978 $ 60,321,412 $ 59,171,757 571,627 62,564,605 470,966 60,792,378 856,835 60,028,592 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 50,803,068 1,232,271 1,061,607 53,096,946 41,410,211 1,193,629 625,668 43,229,508 52,383,167 1,219,825 625,868 54,228,860 Change in net position 9,467,659 17,562,870 5,799,732 Beginning net position 48,165,303 30,602,433 24,802,701 Ending net position $ 57,632,962 $ 48,165,303 $ 30,602,433 2015 Revenue was consistent with Lottery net proceeds reaching the Constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings in Fiscal Year 2015 increased by approximately $100 thousand as a result of an increase of approximately $200 thousand in actual cash received for earnings offset by lower unrealized gain in Fiscal Year 2015 of approximately $100 thousand compared to Fiscal Year 2014. Grant expenditures in Fiscal Year 2015 increased by $9.4 million from Fiscal Year 2014. Grant expenditures are made on a reimbursement basis. 2014 Revenue was consistent with Lottery net proceeds reaching the Constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings were lower in Fiscal Year 2014 due to the one-time receipt in Fiscal Year 2013 of a $750 thousand restricted grant from the Colorado Health Foundation. Investment earnings in Fiscal Year 2014 increased by approximately $383 thousand as a result of an increase of $305 thousand in unrealized gain and an increase of $78 thousand in actual cash received for earnings. Grant expenditures in Fiscal Year 2014 decreased by $11 million from Fiscal Year 2013. Grant expenditures are made on a reimbursement basis. - 12 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2015 and 2014 Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $61.2 million in revenue from the Lottery, which is less than the Constitutional cap projection for Fiscal Year 2016. Although the Constitutional cap has historically been met, Lottery sales have been decreasing since 2013 and discussions with Lottery staff indicate that this trend may continue and the cap may not be met in future years. Also, GOCO is budgeting $2,224,000 for operating expenditures. This amount is classified as follows: Personnel services and benefits Operating expenditures Capital outlay - 13 - $ 1,427,233 770,527 26,240 $ 2,224,000 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2015 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 59,447,836 13,912,352 1,000,000 69,765 - $ 92,350 $ 59,447,836 13,912,352 1,000,000 69,765 92,350 Total assets $ 74,429,953 $ 92,350 $ 74,522,303 $ 16,792,167 57,022 40,152 16,889,341 $ - $ 16,792,167 57,022 40,152 16,889,341 (328,398) (57,212,214) (57,540,612) - 92,350 328,398 57,212,214 92,350 328,398 57,212,214 $ 57,632,962 $ 57,632,962 Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities Commitments and contingencies Fund Balances/Net Position Fund balances Restricted Unrestricted Total fund balances 328,398 57,212,214 57,540,612 Total liabilities and fund balances $ 74,429,953 Net position Invested in capital assets Restricted Unrestricted Total net position See notes to the financial statements. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2014 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 41,558,349 10,518,911 1,000,000 66,554 - $ 65,839 $ 41,558,349 10,518,911 1,000,000 66,554 65,839 Total assets $ 53,143,814 $ 65,839 $ 53,209,653 $ $ - Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities 4,918,120 86,989 39,241 5,044,350 $ 4,918,120 86,989 39,241 5,044,350 Commitments and contingencies Fund Balances/Net Position Fund balances Restricted Unrestricted Total fund balances 550,000 47,549,464 48,099,464 Total liabilities and fund balances (550,000) (47,549,464) (48,099,464) - 65,839 550,000 47,549,464 65,839 550,000 47,549,464 $ 48,165,303 $ 48,165,303 $ 53,143,814 Net position Invested in capital assets Restricted Unrestricted Total net position See notes to the financial statements. - 15 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2015 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 50,803,068 1,232,271 1,013,086 75,032 53,123,457 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 48,521 (75,032) (26,511) $ 50,803,068 1,232,271 1,061,607 53,096,946 - 61,992,978 61,992,978 Net program revenues (expenses) 8,896,032 General revenues Miscellaneous income Investment earnings Total general revenues 51,471 520,156 571,627 - 51,471 520,156 571,627 Excess (deficiency) of expenditures over revenues Change in net position 9,441,148 - (9,441,148) 9,467,659 9,467,659 Fund balance/net position – beginning of the year 48,099,464 65,839 48,165,303 Fund balance/net position – end of the year $ 57,540,612 92,350 $ 57,632,962 $ See notes to the financial statements. - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2014 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 41,410,211 1,193,629 599,194 55,099 43,258,133 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 26,474 (55,099) (28,625) $ 41,410,211 1,193,629 625,668 43,229,508 - 60,321,412 60,321,412 Net program revenues (expenses) 17,091,904 General revenues Miscellaneous income Investment earnings Total general revenues 29,664 441,302 470,966 - 29,664 441,302 470,966 Excess (deficiency) of expenditures over revenues Change in net position 17,534,245 - (17,534,245) 17,562,870 17,562,870 Fund balance/net position – beginning of the year 30,565,219 37,214 30,602,433 Fund balance/net position – end of the year $ 48,099,464 65,839 $ 48,165,303 $ See notes to the financial statements. - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 18 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Years Asset Type Furniture and fixtures Computer hardware and software Equipment 10 3 3-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position GOCO’s general fund balances are classified as unassigned. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the general fund. Net position is presented in the following categories: Invested in capital assets – consists of capital assets net of accumulated depreciation Restricted – consists of the net position that is restricted by a grantor to reimburse awards under GOCO’s school play-yard initiative Unrestricted – consists of the remaining net position that is available for unrestricted use State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Division of Parks and Outdoor Recreation, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2015 and 2014 was approximately $62.0 million and $60.3 million, respectively, which was the maximum amount allowable under the State Constitution. GOCO has estimated Lottery proceeds to be $61.2 million, which is less than the maximum allowable of $63.7 million, for Fiscal Year 2016 due to a downward trend in Lottery sales. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $92,350 and $65,839 adjustments to capital assets as of June 30, 2015 and 2014, respectively, represent the capital assets of GOCO, net of accumulated depreciation. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2014 2015 Capital outlay Depreciation expense Loss on disposal Net adjustment to (increase) net changes in fund balances total governmental fund to arrive at change in net position of governmental activities $ (75,032) 39,968 8,553 $ (55,099) 22,030 4,444 $ (26,511) $ (28,625) Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by State regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 4 - Cash Deposits and Investments (continued) Cash Deposits (continued) As of June 30, 2015, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2015 Carrying Balance Bank Balance Cash on hand Insured deposits $ 137,773 $ 86 44,597 $ 137,773 $ 44,683 As of June 30, 2014, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2014 Carrying Balance Bank Balance Cash on hand Insured deposits $ 153,399 $ 101 105,265 $ 153,399 $ 105,366 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include:       Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO invests its net Lottery proceeds with the State Treasurer. The State Treasurer has invested the monies held in the Trust Fund in the State Treasurer’s cash pool. A detailed composition of the cash and investments is available in the annual State Treasurer’s Report that also provides GASB 40 disclosures regarding investment risk for GOCO’s investments held by the State Treasurer. Summary Total cash deposits and investments are as follows: June 30, 2015 Cash deposits Investments $ 2014 44,683 59,403,153 $ 59,447,836 $ 105,366 41,452,983 $ 41,558,349 Investment Earnings Investment earnings are composed of the following: June 30, 2015 Investment income Net unrealized gain on investments held by the State 2014 $ 507,432 12,724 $ 308,730 132,572 $ 520,156 $ 441,302 Note 5 - Lottery Proceeds Receivable As of June 30, 2015 and 2014, GOCO had distributions owed from the Lottery amounting to $13,912,352 and $10,518,911, respectively. For the receivable as of June 30, 2015, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2015, May 2015 and June 2015, the month in which GOCO reached the Constitutional cap (Note 2). For the receivable as of June 30, 2014, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2014 and May 2014, the month in which GOCO reached the Constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 6 - Note Receivable On June 9, 2006, GOCO entered into a zero interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property cannot be recorded until the COPs are paid in full. Accordingly, the easement has been placed in escrow and will remain there until the COPs have been paid in full by the City, estimated to be in 2018. Upon the due date of the note, the note will be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, the note is considered an advance until these requirements are met. At the time the requirements are met, GOCO will reclassify the note to grant expense. Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2015 follows: Balance at July 1, 2014 Equipment Software Furniture Leasehold improvements Retirements $ 70,782 134,755 31,033 14,560 251,130 (185,291) $ 75,032 75,032 (39,968) $ (23,912) (106,558) (130,470) 121,917 $ 46,870 103,229 31,033 14,560 195,692 (103,342) $ 65,839 $ 35,064 $ (8,553) $ 92,350 Less: accumulated depreciation Total capital assets, net Additions Balance at June 30, 2015 An analysis of the changes in capital assets for the year ended June 30, 2014 follows: Balance at July 1, 2013 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2014 $ 79,455 108,939 34,533 14,560 237,487 (200,273) $ 17,256 37,843 55,099 (22,030) $ (25,929) (12,027) (3,500) (41,456) 37,012 $ 70,782 134,755 31,033 14,560 251,130 (185,291) $ 37,214 $ 33,069 $ (4,444) $ 65,839 Less: accumulated depreciation Total capital assets, net Additions - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 8 - Authorized Grants and Expended Grants The following is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2015 and 2014: Grants Authorized (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2014 $ 241,008,429 225,264,816 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 11,800,000 19,654,712 Transfers/ Deletions $ (224,938) (643,668) $ 252,583,491 244,275,860 248,892,023 14,111,187 (2,294,465) 260,708,745 258,679,265 1,170,174 10,075,845 - (346,751) - 268,408,359 1,170,174 (3,509,822) $1,027,146,629 $ 975,014,707 Funding Purpose Transfers/ Additions Cumulative Authorized Grants at June 30, 2015 $ Cumulative Authorized Grants at June 30, 2013 $ 229,224,256 210,171,323 55,641,744 $ Transfers/ Additions $ 11,807,015 17,810,153 Transfers/ Deletions $ Cumulative Authorized Grants at June 30, 2014 (22,842) (2,716,660) $ 241,008,429 225,264,816 236,321,396 13,175,889 (605,262) 248,892,023 243,285,917 1,170,174 15,507,836 - (114,488) - 258,679,265 1,170,174 (3,459,252) $ 975,014,707 $ 920,173,066 $ - 26 - 58,300,893 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 8 - Authorized Grants and Expended Grants (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Expended Grants at June 30, 2014 $ 220,851,204 192,519,980 230,658,949 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 221,215,565 1,170,174 $ 866,415,872 Funding Purpose Transfers/ Additions $ Cumulative Expended Grants at June 30, 2013 $ 211,656,404 179,693,932 219,443,128 213,042,023 1,170,174 $ 825,005,661 - 27 - 12,351,241 12,576,052 11,410,896 $ 233,202,445 205,096,032 242,069,845 14,464,879 - 235,680,444 1,170,174 50,803,068 $ 917,218,940 Transfers/ Additions $ $ Cumulative Expended Grants at June 30, 2015 Cumulative Expended Grants at June 30, 2014 9,194,800 12,826,048 11,215,821 $ 220,851,204 192,519,980 230,658,949 8,173,542 - 221,215,565 1,170,174 41,410,211 $ 866,415,872 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in July 2016, March 2017, August 2017, and June 2017, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2015 and 2014 was $160,836 and $155,533, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2016 2017 2018 $ 160,913 22,741 874 Total $ 184,528 Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. Benefit terms, including contribution requirements, for the Pension Plan are established and may be amended by the GOCO. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO recognized pension expense of $11,356 and $11,039 for the Fiscal Years Ended June 30, 2015 and 2014, respectively. - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 10 - Pension Plans (continued) Defined Contribution Pension Plan (continued) Employees are vested on a two-year schedule based on 1,000 hours of service. Non-vested GOCO contributions are forfeited upon termination of employment. Such forfeitures are used to first pay any Pension Plan administrative expenses, and then to reduce any employer contribution. For the Fiscal Years Ended June 30, 2015 and 2014, respectively, forfeitures reduced GOCO’s pension expense by $12,170 and $5,425. GOCO contributed $79,668 and $88,186 to the Pension Plan for the Fiscal Years ended June 30, 2015 and 2014, respectively, which approximates the required contribution. As of June 30, 2015 GOCO’s liability to the Pension Plan was $2,253. Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a pre-tax payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2015 and 2014 Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. - 30 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2015 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 61,500,000 $ 61,992,978 260,000 61,760,000 571,627 62,564,605 311,627 804,605 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 50,000,000 1,314,223 744,777 123,000 52,182,000 50,803,068 1,232,271 1,013,086 75,032 53,123,457 (803,068) 81,952 (268,309) 47,968 (941,457) Excess of revenues over expenditures 9,578,000 9,441,148 (136,852) Fund balance – beginning of year 61,643,927 48,099,464 (13,544,463) $ 71,221,927 $ 57,540,612 $ (13,681,315) Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 32 - $ 492,978 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2014 Variance Favorable (Unfavorable) Original Budget Final Budget Actual $ 59,000,000 $ 59,000,000 $ 60,321,412 200,000 59,200,000 200,000 59,200,000 470,966 60,792,378 270,966 1,592,378 50,000,000 50,000,000 41,410,211 8,589,789 1,268,264 608,456 70,900 51,947,620 1,268,264 658,456 70,900 51,997,620 1,193,629 599,194 55,099 43,258,133 74,635 59,262 15,801 8,739,487 Excess of revenues over expenditures 7,252,380 7,202,380 17,534,245 10,331,865 Fund balance – beginning of year 54,441,547 54,441,547 30,565,219 (23,876,328) Fund balance – end of year $ 61,693,927 $ 61,643,927 $ 48,099,464 $ (13,544,463) Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures - 33 - $ 1,321,412 �INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audit contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the Fiscal Year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated November 17, 2015. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 34 - �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Governmental Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. EKS&H LLLP November 17, 2015 Denver, Colorado - 35 - �REQUIRED COMMUNICATIONS TO THE MEMBERS OF THE STATE BOARD OF GREAT OUTDOORS COLORADO TRUST FUND AND THE LEGISLATIVE AUDIT COMMITTEE Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee: We have audited the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the year ended June 30, 2015. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Governmental Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our contract dated April 20, 2015. Professional standards also require that we communicate to you the following information related to our audit. SIGNIFICANT AUDIT FINDINGS Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by GOCO are described in Note 2 to the financial statements. No significant new accounting policies were adopted, and the application of existing policies was not changed during Fiscal Year 2015. We noted no transactions entered into by GOCO during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Management’s use of estimates is disclosed in the notes to financial statements. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures in the financial statements are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. - 36 - �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no such audit adjustments for the year ended June 30, 2015. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from GOCO’s management that are included in the management representation letter dated November 17, 2015. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to GOCO’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consulting accountant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as GOCO’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. OTHER MATTERS We applied certain limited procedures to management’s discussion and analysis and budgetary comparison information, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. - 37 - �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee This information is intended solely for the information and use of the Legislative Audit Committee, GOCO’s Board and management, and others within GOCO and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record upon release by the Legislative Audit Committee. EKS&H LLLP November 17, 2015 Denver, Colorado - 38 - � https://cpw.cvlcollections.org/files/original/4d463db84dca691d43c06adfe8565ffb.pdf 006ff655152f618fd92fcae5bea67524 PDF Text Text STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Financial and Compliance Audit For the Years June 30, 2014 and 2013 �LEGISLATIVE AUDIT COMMITTEE 2014 MEMBERS Senator Lucia Guzman Chair Senator David Balmer Senator Kevin Grantham Representative Dan Nordberg Representative Dianne Primavera Representative Su Ryden Representative Jerry Sonnenberg Senator Cheri Jahn OFFICE OF THE STATE AUDITOR Dianne E. Ray State Auditor Kerri Hunter Deputy State Auditor Crystal Dorsey Audit Manager EKS&H LLLP Contract Auditors AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT WWW.STATE.CO.US/AUDITOR A BOUND REPORT MAY BE OBTAINED BY CALLING THE OFFICE OF THE STATE AUDITOR 303.869.2800 PLEASE REFER TO REPORT NUMBER 1422F WHEN REQUESTING THIS REPORT �December 1, 2014 Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We have completed the financial statement audit of the State Board of the Great Outdoors Colorado Trust Fund as of and for the year ended June 30, 2014. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We were engaged to conduct our audit pursuant to Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of the State Board of the Great Outdoors Colorado Trust Fund. The reports that we have issued as a result of this engagement are set forth in the table of contents, which follows. Sincerely, EKS&H LLLP �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Table of Contents Page Report Summary ....................................................................................................................................... 1 Recommendation Locator ......................................................................................................................... 3 Description of the State Board of the Great Outdoors Colorado Trust Fund ........................................... 4 Finding and Recommendation .................................................................................................................. 7 Disposition of Prior Audit Finding and Recommendation ..................................................................... 11 Independent Auditors’ Report ................................................................................................................ 12 Management’s Discussion and Analysis ................................................................................................ 14 Basic Financial Statements Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2014 ................. 19 Governmental Fund Balance Sheet and Statement of Net Position – June 30, 2013 ................. 20 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2014............................... 21 Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities – For the Year Ended June 30, 2013............................... 22 Notes to Financial Statements .................................................................................................... 23 Required Supplementary Information Budgetary Comparison Schedule – For the Year Ended June 30, 2014 ..................................... 37 Budgetary Comparison Schedule – For the Year Ended June 30, 2013 ..................................... 38 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................... 39 Required Communications to the Legislative Audit Committee ............................................................ 41 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2014 and 2013 AUTHORITY, PURPOSE, AND SCOPE The Fiscal Year 2014 audit of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) was completed under the authority of Article XXVII, Section 6(3), of the Colorado Constitution, which requires the State Auditor to conduct an annual audit of GOCO, and Section 2-3-103, C.R.S., which authorizes the State Auditor to conduct annual audits of political subdivisions as required by law. The State Auditor contracted with EKS&H LLLP to conduct this audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. We performed our audit work during the period from June 2014 through December 2014. The purpose of this audit was (a) to perform a financial and compliance audit of GOCO, including a review of internal controls, as required by generally accepted auditing standards and Government Auditing Standards; (b) to review GOCO’s compliance with appropriate state and federal laws and rules and regulations that could have a material effect on GOCO’s financial statements; (c) to prepare audit findings and recommendations for improvements in internal controls; and (d) to evaluate progress in implementing prior audit findings. AUDITORS’ OPINIONS AND REPORTS An independent auditors’ report on the financial statements of GOCO, dated December 1, 2014, has been issued, which states that the financial statements present fairly, in all material respects, the financial position of GOCO as of June 30, 2014, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards, dated December 1, 2014, has also been issued, which states that the results of the Contract Auditors’ tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. -1- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Report Summary Financial and Compliance Audit For the Years Ended June 30, 2014 and 2013 SUMMARY OF CURRENT YEAR MAJOR AUDIT FINDINGS AND RECOMMENDATIONS We have identified one finding as follows: Finding: The GOCO Board should adopt a formal policy to determine the optimal amount of funds to reserve for future expenditures and implement a process for regularly evaluating historical expenditure and cash balance trends compared to grant awards and cash balances and revise estimates and projections, as appropriate. SUMMARY OF PROGRESS IN IMPLEMENTING PRIOR AUDIT RECOMMENDATIONS The audit report for the Fiscal Year Ended June 30, 2013, included one recommendation. GOCO agreed with the recommendation and the recommendation was partially implemented as of December 1, 2014. -2- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Recommendation Locator Financial and Compliance Audit For the Years Ended June 30, 2014 and 2013 Rec. No. Page No. 1 7 Recommendation Summary Agency Response Implementation Date The GOCO Board should adopt a formal policy to determine the optimal amount of funds to reserve for future expenditures and implement a process for regularly evaluating historical expenditure and cash balance trends compared to grant awards and cash balances and revise estimates and projections, as appropriate. In establishing the optimal funds to reserve and ways to maximize grant awards, GOCO should evaluate estimated future expenditures by year based on the awards outstanding, in addition to considering projected lottery proceeds, amount of awards that have been made ahead of receiving lottery proceeds and substantially equal requirements, and other appropriate metrics. Such analysis should be included as part of the annual Spending Plan as well as the annual evaluation of the status of the 5 Year Strategic Plan. Agree June 2015 -3- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2014 and 2013 The Great Outdoors Colorado Trust Fund (“GOCO”) and the State Board, which oversees GOCO, were created by Article XXVII of the Colorado Constitution. Article XXVII is the result of the passage of the Great Outdoors Colorado Initiative (Amendment 8) during the November 3, 1992 election. Fiscal Year 2014 was the twenty-first year of operations for GOCO. Article XXVII establishes procedures for the distribution of net proceeds from state-supervised Lottery games. The intent of Article XXVII is to use a portion of net State Lottery (“Lottery”) proceeds to provide funding for wildlife, park, river, trail, and open space heritage. To help ensure this, Article XXVII allocated an amount of net Lottery proceeds to GOCO. The amount is adjusted annually based on the change from the 1992 Denver Consumer Price Index (“CPI”). In turn, GOCO is responsible for funding appropriate programs through designated state and local agencies as well as other qualifying entities. All of GOCO’s revenues, with the exception of investment earnings and miscellaneous income, are from Lottery proceeds. During 2002, House Bill 1250 extended the termination date of Lottery to July 1, 2024, thus continuing funding for GOCO through June 30, 2024. As of June 30, 2014, the State Board that oversees GOCO consists of two members of the public from each of the seven congressional districts, appointed by the Governor; a representative for outdoor recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”); a representative for wildlife issues, also designated by the Commission; and the Executive Director of the Department of Natural Resources. Monies allocated to GOCO are for the purposes established in Article XXVII and are not subject to appropriation for any other purpose. GOCO is a political subdivision of the State of Colorado (“State”). During Fiscal Year 2014, GOCO had a permanent staff of 12 and received $60.3 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2014. During Fiscal Year 2013, GOCO had a permanent staff of 14 and received $59.2 million in net Lottery proceeds, the maximum allowable for Fiscal Year 2013 per Article XXVII as adjusted for the change in the CPI. CONSTITUTIONAL REQUIREMENTS FOR SPENDING Article XXVII requires the State Board, which oversees GOCO, to assure that “amounts expended for each of the [funding] purposes over a period of years be substantially equal.” The four funding purposes are wildlife, outdoor recreation, competitive grants for open space, and competitive matching grants to local governments for open lands and parks. -4- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2014 and 2013 The following chart shows the cumulative grants expended and authorized since GOCO’s inception in 1993. Grants Authorized represents the amount, by purpose, approved by the GOCO Board. This authorization process is used by the GOCO Board to achieve the goal of substantially equal expenditures across the four purposes. Grants Expended represents cumulative actual expenditures by purpose and is the measurement used for substantially equal. GOCO Grants Cumulative through Fiscal Year 2014 (in thousands) Funding Purpose Purpose 1 – Wildlife Purpose 2 – Parks and outdoor recreation Purpose 3 – Competitive grants for open space Purpose 4 – Competitive matching grants to local governments for open lands and parks Non-categorized – Discretionary Total Grants Authorized Amount % Grants Expended Amount % $ 241,008 24.8% $ 220,851 25.5% 225,265 23.1 192,520 22.3 248,892 25.6 230,659 26.6 258,679 973,844 1,170 26.5 25.6 N/A 221,216 865,246 1,170 $ 975,014 100.0% $ 866,416 100.0% Source: Data provided by GOCO -5- Cumulative Difference between Grants Authorized and Expended N/A $ 108,598 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Description of the State Board of the Great Outdoors Colorado Trust Fund For the Years Ended June 30, 2014 and 2013 The next two charts show the trend over the last five years of cumulative grants authorized by GOCO and grants expended by purpose. As shown in the first chart, grant authorizations for three of the four purposes have moved closer to the substantially equal requirement over the past five years. As shown in the second chart, grant expenditures for three of the four purposes have moved further from the substantially equal requirement over the past five years. However, expenditures were improved for the Outdoor Recreation Purpose by 0.5% from Fiscal Years 2013 to 2014. GOCO Grants Authorized Cumulative Trend for the Previous Five Years 2014 FiveYear Change Funding Purpose 2010 Grants Authorized % 2011 2012 2013 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 23.5% 23.7 24.3% 23.1 24.5% 22.0 24.9% 22.9 24.8% 23.1 1.3% (0.6)% 26.2 25.9 26.5 25.7 25.6 (0.6)% 26.6 26.7 27.0 26.5 26.5 (0.1)% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO GOCO Grants Expended Cumulative Trend for the Previous Five Years 2014 FiveYear Change Funding Purpose 2010 Grants Expended % 2011 2012 2013 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks 25.1% 22.8 25.0% 22.2 25.5% 21.8 25.7% 21.8 25.5% 22.3 0.4% (0.5)% 26.7 26.7 26.7 26.6 26.6 (0.1)% 25.4 26.1 26.0 25.9 25.6 0.2% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Data provided by GOCO -6- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Finding and Recommendation For the Years Ended June 30, 2014 and 2013 GOCO – Cash Reserves (Classification of Finding: Not Classified – not an internal control issue) What audit work was performed and what was the purpose? Our audit included a financial and compliance audit of GOCO, including a review of internal controls as required by generally accepted auditing standards and Government Auditing Standards, and review of GOCO’s compliance with appropriate state and federal laws, rules, and regulations, which could have a material effect on GOCO’s financial statements. Our audit included a review of the Constitutional amendment related to moneys allocated to the GOCO Trust Fund. How were the results measured? In 1992 the citizens of Colorado passed a Constitutional amendment creating the Great Outdoors Colorado Program “to preserve, protect, enhance and manage the state’s wildlife, park, river, trail and open space heritage.” In addition, Article XXVII, Section 6(2)(e), of the Colorado Constitution requires GOCO’s board to: “…determine what portions, if any, of monies allocated to the Trust Fund should be invested in an interest-bearing account by the Treasurer of the State of Colorado, to remain in the Trust Fund and available for expenditure in future years.” The GOCO board requirement to determine the amount of cash needed for future expenditures should work in tandem with other Constitutional requirements of GOCO including that expenditures to wildlife, outdoor recreation, open space and local governments be substantially equal. What did the audit work find? While GOCO’s Board considers the cash balance in the Trust Fund when determining the annual spending plan, GOCO lacks a formal policy to determine the amount of cash needed for all future expenditures, which includes assessing awards included in prior annual spending plans but not yet expended and future lottery proceeds. The audit report for the year ended June 30, 2013 included one recommendation that GOCO’s Board review its current processes and adopt formal policies to determine the optimal amount of funds to reserve for future expenditures and maximize grant awards in the current year. It also recommended that the GOCO Board formally approve the portions of monies that are allocated to the Trust Fund that should be invested and held in an interest-bearing trust fund account by the Treasurer of the State of Colorado for expenditure in future years. GOCO agreed with the prior year recommendation and the GOCO Board approved, as part of the Fiscal Year 2015 Spending Plan resolution, GOCO’s estimated cash balance at April 30, 2014, to be held as appropriate due to the outstanding grant obligations exceeding cash at that time. Although the Board considers the cash balance in relation to the annual spending plan, the GOCO Board did not adopt a formal policy to determine the optimal amount of funds to reserve for future expenditures and to maximize grant awards. -7- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Finding and Recommendation For the Years Ended June 30, 2014 and 2013 Why did this occur? Within the GOCO Fiscal Year 2015 Spending Plan, the GOCO Board approved the grant spending by purpose for the coming year; however, the Fiscal Year 2015 Spending Plan does not include a comparison of estimated grant expenditures for outstanding and anticipated future grant awards to available cash and projected lottery proceeds for any future periods beyond Fiscal Year 2015. In addition, while the Fiscal Year 2015 Spending Plan addresses estimated cash flows for Fiscal Year 2015 based on lottery proceeds and quarterly grant expenditures, the estimated grant expenditures are not clearly tied to historical trends. Based on a five-year historical trend for grants authorized compared to grants expended, GOCO has awarded $282,000,000 and expended $276,000,000; however, since grants authorized may not be expended in the same year, additional analysis should be performed to evaluate historical trends for expenditures as compared to the awards and assumptions revised, as appropriate. Currently, GOCO staff conservatively estimates that awards not yet expended will be expended in the near term, generally in the most current period; whereas, a historical analysis may provide a more realistic projection of the timing of the grant expenditures which can help direct the overall future cash needs. For example, the results may indicate that the expenditure trends netted with future lottery proceeds require a reserve policy as a percent of outstanding authorized grants, calculated and adjusted at the end of the fiscal year. We also noted that GOCO does not have an existing, documented process for revisiting previous expenditure and cash balance estimates. This process would allow GOCO to identify historical trends and potential required changes in budget assumptions. For example, we noted that GOCO’s cash balance projections provided to the Board in December 2013 during Fiscal Year 2014 did not prove to be accurate. Specifically, at the December 10, 2013, board meeting, GOCO staff reported to the Board that cash was being maintained at $20 million and was expected to drop below $10 million for several months during the remainder of Fiscal Year 2014. During the remainder of Fiscal Year 2014, however, month-end cash balances ranged from $29 million at January 31, 2014 to $47 million at May 31, 2014; in other words, the lowest cash balance during the period was nearly three times the projected balance, due to $22 million in expected expenditures that did not occur. As shown in the exhibit below, annual lottery revenues have increased over the last five years while expenditures have significantly fluctuated as compared to lottery proceeds. For example, during the five year period, expenditures were $17 million greater than proceeds in 2011 and $19 million less than proceeds in 2014. Since the disparity between proceeds and expenditures may be significant in a one year period, this further demonstrates the need to accurately budget future expenditures and regularly evaluate these estimates. -8- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Finding and Recommendation For the Years Ended June 30, 2014 and 2013 Exhibit 1 Great Outdoors Colorado Grant Expenditures, Lottery Revenues, and Cash Balances Fiscal Years 2010 through 2014 (Amounts in Thousands) Source: GOCO Audits Fiscal Years 2010 – 2014 Why does the finding matter? A formal policy for determining the optimal amount of funds to reserve for future expenditures and a process for regularly evaluating historical expenditure trends compared to awards and cash balances, will allow GOCO to better plan for and manage grant awards, ensure that the appropriate level of funds is available to pay grant commitments and, at the same time, maximize the current grant awards using Lottery revenues. -9- �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Finding and Recommendation For the Years Ended June 30, 2014 and 2013 Recommendation No. 1: The GOCO Board should adopt a formal policy to determine the optimal amount of funds to reserve for future expenditures and implement a process for regularly evaluating historical expenditure and cash balance trends compared to grant awards and cash balances and revise estimates and projections, as appropriate. In establishing the optimal funds to reserve and ways to maximize grant awards, GOCO should evaluate estimated future expenditures by year based on the awards outstanding, in addition to considering projected lottery proceeds, amount of awards that have been made ahead of receiving lottery proceeds and substantially equal requirements, and other appropriate metrics. Such analysis should be included as part of the annual Spending Plan as well as the annual evaluation of the status of the 5 Year Strategic Plan. (Classification of Finding: Not Classified – not an internal control issue) GOCO’s Response: Agree. Implementation date: June 2015. GOCO will develop a formal policy to determine the appropriate amount of cash needed for expenditures during a five year period. The Board will regularly evaluate historical grant expenditure trends to inform their funding decisions as part of the policy. GOCO will add grant expenditure trends to its five year financial plan analysis along with considering months ahead of lottery, outstanding grants, and strategic planning goals as GOCO considers the appropriate level of awards for the next five year financial plan and ways to optimize grants awards and expenditures reflective of public priorities. GOCO notes, however, that given the public’s expectation that GOCO funding be used for a wide range of projects such as smaller grants, larger initiatives, and the need to respond to unpredictable challenges such as the floods, that variations in expenditure patterns will occur and that past expenditures will not necessarily always be good indicators of future expenditure patterns by GOCO grantees. GOCO also notes that while it will review historical patterns of expenditures, optimizing grant awards is a complex assessment of many factors. - 10 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Disposition of Prior Audit Finding and Recommendation For the Years Ended June 30, 2014 and 2013 Below is the recommendation included in the audit report for the year ended June 30, 2013, and the disposition as of June 30, 2014: Recommendation No. 1: GOCO’s Board should review its current processes and adopt formal policies to determine the optimal amount of funds to reserve for future expenditures and maximize grant awards in the current year. The GOCO Board should formally approve the portions of monies that are allocated to the Trust Fund that should be invested and held in an interest-bearing trust fund account by the Treasurer of the State of Colorado for expenditure in future years. Disposition: GOCO agreed with the recommendation and the recommendation was partially implemented. The finding is repeated in Fiscal Year 2014. - 11 - �INDEPENDENT AUDITORS’ REPORT Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) as of and for the years ended June 30, 2014 and 2013, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. - 12 - �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of GOCO as of June 30, 2014 and 2013, and the respective changes in financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 14 through 18 and 37 through 38 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated December 1, 2014 on our consideration of GOCO’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GOCO’s internal control over financial reporting and compliance. EKS&H LLLP December 1, 2014 Denver, Colorado - 13 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2014 and 2013 The State Board of the Great Outdoors Colorado Trust Fund’s (“GOCO”) management discussion and analysis is designed to provide a financial performance overview of GOCO’s financial activities for the fiscal years ended June 30, 2014 and 2013. The management’s discussion and analysis is intended to be read in conjunction with GOCO’s financial statements beginning on page 19. Financial Highlights GOCO receives funding from net Lottery proceeds and makes investments and grants for projects that preserve, protect, and enhance Colorado’s wildlife, park, river, trail, and open space heritage. Investments and grants are provided for four funding purposes: 1) wildlife, 2) outdoor recreation, 3) competitive grants for open space, and 4) competitive matching grants to local governments for open lands and parks. The following table highlights significant variances between Fiscal Year 2014, Fiscal Year 2013, and Fiscal Year 2012. Fiscal Year Ended June 30, 2013 2012 2014 Lottery revenues Grant expenditures $ 60,321,412 $ 41,410,211 $ 59,171,757 $ 52,383,167 $ 57,065,579 $ 57,624,841 2014/2013 Variance 2013/2012 Variance $ 1,149,655 $ (10,972,956) $ 2,106,178 $ (5,241,674) 2014 GOCO received its maximum allowable Lottery proceeds for the year of approximately $60.3 million, per the Constitutional cap. This represents an approximate $1.1 million increase over Fiscal Year 2013 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures decreased by $11 million from Fiscal Year 2013. Grant expenditures fluctuate year to year due to timing differences of project completions, but GOCO averages approximately $50 million in grant disbursements per year. Fiscal Year 2014 expenditures were lower than the average. 2013 GOCO received its maximum allowable Lottery proceeds for the year of approximately $59.2 million, per the Constitutional cap. This represents an approximate $2.1 million increase over Fiscal Year 2012 in Lottery proceeds to GOCO due to an increase in the Denver Consumer Price Index (“CPI”). Grant expenditures decreased by $5.2 million from Fiscal Year 2012. Grant expenditures fluctuate year to year due to timing differences of project completions. - 14 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2014 and 2013 Overview of the Financial Statements This annual report consists of three parts – management’s discussion and analysis, the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of GOCO:  The first two statements are government-wide financial statements that provide both long-term and short-term information about GOCO’s overall financial status.  The governmental fund statements tell how operations were financed in the short term as well as what remains for future spending. GOCO’s primary source of income is the State Lottery. Net Lottery proceeds are distributed as follows:    40% to the Conservation Trust Fund, 10% to the Division of Parks and Outdoor Recreation (“DPOR”), 50% to GOCO up to the Constitutional limit. GOCO’s funding is capped at $35 million using the base year of 1992, adjusted annually for inflation ($60.3 million and $59.2 million in Fiscal Year 2014 and Fiscal Year 2013, respectively). Any remaining net Lottery proceeds in excess of the cap were annually distributed to the Public School Capital Construction Assistance Fund for Fiscal Year 2014 and Fiscal Year 2013. Government-Wide Statements Statement of Net Position The following table reflects the condensed statement of net position as of June 30, 2014, 2013, and 2012. June 30, 2014 2013 2012 Current and other assets Capital assets, net Total assets $ 53,143,814 65,839 53,209,653 $ 40,194,662 37,214 40,231,876 $ 34,088,984 29,528 34,118,512 Liabilities 5,044,350 9,629,443 9,315,811 Net position Invested in capital assets Restricted Unrestricted 65,839 550,000 47,549,464 37,214 750,000 29,815,219 29,528 24,773,173 $ 48,165,303 - 15 - $ 30,602,433 $ 24,802,701 Total net position �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2014 and 2013 Government-Wide Statements (continued) Statement of Net Position (continued) 2014 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $12.4 million during Fiscal Year 2014. Lottery proceeds receivable slightly increased to $10.5 million at June 30, 2014 from $10 million at June 30, 2013. The increase in the receivable is due to the increase in the Constitutional cap. Lottery proceeds are earned throughout the year. GOCO reached the Constitutional amount in May in both Fiscal Year 2014 and Fiscal Year 2013. As of June 30, 2014, liabilities decreased by $4.6 million from June 30, 2013. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills and estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”). The amount includes the June 2014 bill for Wildlife investments for Fiscal Year 2014 and the March through June 2014 bills for the Parks investments. The amount accrued for Wildlife monthly bills and land transactions was $1.3 million less in Fiscal Year 2014. The amount accrued for Parks monthly bills was $800 thousand more in Fiscal Year 2014. Open Space purposes had approximately $3.53 million less in land transactions accrued in Fiscal Year 2014. In addition, $500 thousand less in local government grants was accrued in Fiscal Year 2014. Net Position-Restricted increased in Fiscal Year 2013 due to GOCO receiving a $750 thousand grant from the Colorado Health Foundation. These funds are restricted and will be utilized in Fiscal Years 2014 and 2015 to reimburse these awards. The $200 thousand reduction in restricted fund balances in Fiscal Year 2014 is due to funds being expended. 2013 The significant portions of current and other assets are cash, Lottery proceeds receivable, and notes receivable. Cash increased by approximately $6 million during Fiscal Year 2013. Lottery proceeds receivable slightly increased to $10 million at June 30, 2013 from $9.9 million at June 30, 2012. The increase in the receivable is due to the timing of when the Constitutional cap is reached. Lottery proceeds are earned throughout the year. GOCO reached the Constitutional amount in May for Fiscal Year 2013 and in June for Fiscal Year 2012. As of June 30, 2013, liabilities increased by $300 thousand from June 30, 2012. The liabilities outstanding at fiscal year-end consisted mainly of monthly bills, estimates of reimbursable costs incurred by Colorado Parks and Wildlife (“CPW”), and a large land transaction. The amount includes the May and June 2014 bills for Wildlife investments for Fiscal Year 2013 and the March through June 2013 bills for the Parks investments. The amount accrued for Wildlife monthly bills and land transactions was $2.8 million less in Fiscal Year 2013. The amount accrued for Parks monthly bills was $700 thousand less in Fiscal Year 2013. Open Space purposes had approximately $3.5 million more in land transactions accrued in Fiscal Year 2013. In addition, $300 thousand more in local government grants was accrued in Fiscal Year 2013. - 16 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2014 and 2013 Government-Wide Statements (continued) Statement of Net Position (continued) 2013 (continued) Net Position-Restricted increased in Fiscal Year 2013 due to GOCO receiving a $750 thousand grant from the Colorado Health Foundation. The grant was used to increase the awards to GOCO’s school play-yard initiative. These funds are restricted and will be utilized in Fiscal Years 2014 and 2015 to reimburse these awards. Statement of Activities The following table reflects the condensed statement of activities for the Fiscal Years ended June 30, 2014, 2013, and 2012. Fiscal Years Ended June 30, 2014 2013 2012 Revenue Lottery revenue Miscellaneous income and investment earnings Total revenue $ 60,321,412 $ 59,171,757 $ 57,065,579 470,966 60,792,378 856,835 60,028,592 270,068 57,335,647 Program expenses Grants expended Personnel services and benefits Operating and capital outlay Total expenses 41,410,211 1,193,629 625,668 43,229,508 52,383,167 1,219,825 625,868 54,228,860 57,624,841 1,151,730 642,535 59,419,106 Change in net position 17,562,870 5,799,732 (2,083,459) Beginning net position 30,602,433 24,802,701 26,886,160 Ending net position $ 48,165,303 $ 30,602,433 $ 24,802,701 - 17 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Management’s Discussion and Analysis June 30, 2014 and 2013 Government-Wide Statements (continued) Statement of Activities (continued) 2014 Revenue was consistent with Lottery net proceeds reaching the Constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings were lower in Fiscal Year 2014 due to the one-time receipt in Fiscal Year 2013 of a $750 thousand restricted grant from the Colorado Health Foundation. Investment earnings in Fiscal Year 2014 increased by approximately $383 thousand as a result of an increase of $305 thousand in unrealized gain and an increase of $78 thousand in actual cash received for earnings. Grant expenditures in Fiscal Year 2014 decreased by $11 million from Fiscal Year 2013. Grant expenditures are made on a reimbursement basis. 2013 Revenue was consistent with Lottery net proceeds reaching the Constitutional cap each year since Fiscal Year 2004. Miscellaneous income and investment earnings were higher in Fiscal Year 2013 due to the receipt of a $750 thousand restricted grant from the Colorado Health Foundation for reimbursement of awards under GOCO’s school play-yard initiative. Investment earnings in Fiscal Year 2013 decreased by approximately $200 thousand due to a larger unrealized loss. Grant expenditures in Fiscal Year 2013 decreased by $5.2 million from Fiscal Year 2012. Grant expenditures are made on a reimbursement basis. Economic Factors and Next Year’s Budget Next year, GOCO is projecting approximately $61.5 million in revenue from the Lottery, which is less than the Constitutional cap projection for Fiscal Year 2015. Also, GOCO is budgeting $2,182,000 for operating expenditures. This amount is classified as follows: Personnel services and benefits Operating expenditures Capital outlay - 18 - $ 1,314,223 744,777 123,000 $ 2,182,000 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2014 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 41,558,349 10,518,911 1,000,000 66,554 - $ 65,839 $ 41,558,349 10,518,911 1,000,000 66,554 65,839 Total assets $ 53,143,814 $ 65,839 $ 53,209,653 $ $ - Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities 4,918,120 86,989 39,241 5,044,350 $ 4,918,120 86,989 39,241 5,044,350 Commitments and contingencies Fund Balances/Net Position Fund balances Restricted Unrestricted Total fund balances 550,000 47,549,464 48,099,464 Total liabilities and fund balances (550,000) (47,549,464) (48,099,464) - 65,839 550,000 47,549,464 65,839 550,000 47,549,464 $ 48,165,303 $ 48,165,303 $ 53,143,814 Net position Invested in capital assets Restricted Unrestricted Total net position See notes to the financial statements. - 19 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Governmental Fund Balance Sheet and Statement of Net Position June 30, 2013 General Fund Adjustments (Note 3) Statement of Net Position Assets Cash and investments Lottery proceeds receivable Note receivable Other assets Capital assets, net of accumulated depreciation $ 29,117,631 10,005,058 1,000,000 71,973 - $ 37,214 $ 29,117,631 10,005,058 1,000,000 71,973 37,214 Total assets $ 40,194,662 $ 37,214 $ 40,231,876 $ $ - Liabilities Grants payable Accounts payable Compensated absences payable Total liabilities 9,455,892 128,523 45,028 9,629,443 $ 9,455,892 128,523 45,028 9,629,443 Commitments and contingencies Fund Balances/Net Position Fund balances Restricted Unrestricted Total fund balances 750,000 29,815,219 30,565,219 Total liabilities and fund balances (750,000) (29,815,219) (30,565,219) - 37,214 750,000 29,815,219 37,214 750,000 29,815,219 $ 30,602,433 $ 30,602,433 $ 40,194,662 Net position Invested in capital assets Restricted Unrestricted Total net position See notes to the financial statements. - 20 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2014 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 41,410,211 1,193,629 599,194 55,099 43,258,133 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 26,474 (55,099) (28,625) $ 41,410,211 1,193,629 625,668 43,229,508 - 60,321,412 60,321,412 Net program revenues (expenses) 17,091,904 General revenues Miscellaneous income Investment earnings Total general revenues 29,664 441,302 470,966 - 29,664 441,302 470,966 Excess (deficiency) of expenditures over revenues Change in net position 17,534,245 - (17,534,245) 17,562,870 17,562,870 Fund balance/net position – beginning of the year 30,565,219 37,214 30,602,433 Fund balance/net position – end of the year $ 48,099,464 65,839 $ 48,165,303 $ See notes to the financial statements. - 21 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance and Statement of Activities For the Year Ended June 30, 2013 General Fund Expenditures/expenses Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures/expenses $ 52,383,167 1,219,825 615,974 17,580 54,236,546 Program revenues – State Lottery proceeds Adjustments (Note 3) Statement of Activities $ 9,894 (17,580) (7,686) $ 52,383,167 1,219,825 625,868 54,228,860 - 59,171,757 59,171,757 Net program revenues (expenses) 4,942,897 General revenues Miscellaneous income Investment earnings Total general revenues 798,093 58,742 856,835 - 798,093 58,742 856,835 Excess (deficiency) of expenditures over revenues Change in net position 5,792,046 - (5,792,046) 5,799,732 5,799,732 Fund balance/net position – beginning of the year 24,773,173 29,528 24,802,701 Fund balance/net position – end of the year $ 30,565,219 37,214 $ 30,602,433 $ See notes to the financial statements. - 22 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 1 - Definition of Reporting Entity The State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), a political subdivision of the State of Colorado (the “State”), was established as a result of the 1992 General Election through the electorate’s adoption of Amendment 8, which resulted in Article XXVII of the Colorado Constitution. Article XXVII established the Great Outdoors Colorado Trust Fund and the State Board as the trustee of the trust fund and allocates certain net proceeds of the Colorado Lottery to GOCO in trust. Article XXVII authorizes GOCO to use these funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas by making strategic investments, fostering partnerships among diverse interests, and supporting education about the outdoor environment of the State. GOCO follows the Governmental Accounting Standards Board (“GASB”) accounting pronouncements that provide guidance for determining which governmental activities, organizations, and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization’s elected governing body as the basic criterion for including a possible component governmental organization in a primary government’s legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization’s governing body, ability to impose its will on the organization, potential for the organization to provide specific financial benefits or burdens, and fiscal dependency. GOCO does not have any component units. GOCO is a separate political subdivision of the State as stated in Article XXVII. GOCO is not considered to be a component unit of the State for the purpose of the State’s annual financial reporting. Note 2 - Summary of Significant Accounting Policies The significant accounting policies of GOCO are described as follows: Government-Wide and Fund Financial Statements Because GOCO is a special-purpose government engaged in a single governmental program, it has presented its government-wide financial statements and fund financial statements together with an adjustment column to show the reconciliation between the two required basic statements. The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of GOCO. Both of the government-wide financial statements are designed to report functions of GOCO that are principally supported by intergovernmental revenues and operating grants (governmental activities). The primary governmental activities of GOCO include the distribution of funds to preserve and enhance Colorado parks, wildlife, trails, rivers, open space, and natural areas. - 23 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or program is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include grants, contributions, and other revenues that are restricted to use in the operational or capital requirements of a specific function or program. Other revenues not directly related to a particular function or program are reported separately as general revenues. Since GOCO does not operate any enterprise fund or internal service fund activities, there are no proprietary funds to include in this report. The general fund, because it is considered to be a major governmental fund, and is GOCO’s only fund, is reported as a separate column in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as expenditures when all of the eligibility and reimbursement requirements of the grantor have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current fiscal year or soon enough thereafter to pay liabilities of the current fiscal year. For this purpose, GOCO considers revenues to be available if they are collectible within approximately 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Under the modified accrual basis of accounting, as used in the governmental fund financial statements, acquisition costs of capital assets are recorded as expenditures at the time of purchase, and depreciation is not recognized on these capital assets. GOCO reports the following major governmental fund: The general fund is the only fund. It accounts for all general operating financial resources of GOCO. There are no resources required to be accounted for in any other fund. - 24 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies (continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Budget GOCO’s budget is adopted by the Board. Capital Assets The capital assets of GOCO consist primarily of furniture and fixtures, computer hardware and software, equipment, and leasehold improvements used in the routine operation of GOCO. Durable items with a useful life greater than one year and a cost greater than $2,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Capital assets of GOCO are depreciated using the straight-line method over the following estimated useful lives: Years Asset Type Furniture and fixtures Computer hardware and software Equipment 10 3 - 10 3-7 Leasehold improvements are amortized over the life of the lease or expected useful life, whichever is less. Accrual for Compensated Absences GOCO has a policy that allows permanent employees to accumulate unused vacation benefits up to a maximum of 280 hours. Sick leave is forfeited upon termination of employment with GOCO and, therefore, is not accrued on GOCO’s financial statements. A liability has been recorded for compensated absences in the financial statements. - 25 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies (continued) Fund Balances and Net Position GOCO’s general fund balances are classified as unassigned. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the general fund. Net position is presented in the following categories: Invested in capital assets – consists of capital assets net of accumulated depreciation Restricted – consists of the net position that is restricted by a grantor to reimburse awards under GOCO’s school play-yard initiative Unrestricted – consists of the remaining net position that is available for unrestricted use State Lottery Proceeds Lottery proceeds are a distribution from the Colorado State Lottery based on the calculation of net proceeds and allocations established in Article XXVII. The calculation of net proceeds incorporates Lottery revenue, operation expenses, prize payments, and certain reserves. Net proceeds are distributed not less than quarterly to the Conservation Trust Fund, Division of Parks and Outdoor Recreation, and GOCO in amounts allocable by statute. GOCO’s share of Lottery proceeds is limited by Article XXVII to $35 million annually, adjusted for changes in the CPI compounded annually based on the 1992 base-year CPI. GOCO’s share of Lottery proceeds for Fiscal Years 2014 and 2013 was approximately $60.3 million and $59.2 million, respectively, which was the maximum amount allowable under the State Constitution. GOCO has estimated Lottery proceeds to be $61.5 million, which is less than the maximum allowable of $62 million, for Fiscal Year 2015. Note 3 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet and statement of net position includes an adjustment between fund balance total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. The only element of that adjustment pertains to capital assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fund. The $65,839 and $37,214 adjustments to capital assets as of June 30, 2014 and 2013, respectively, represent the capital assets of GOCO, net of accumulated depreciation. - 26 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 3 - Reconciliation of Government-Wide and Fund Financial Statements (continued) Explanation of Certain Differences Between the Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance and the Government-Wide Statement of Activities The statement of governmental fund revenues, expenditures, and changes in fund balance and statement of activities includes an adjustment between net changes in fund balance - total governmental fund and change in net position of governmental activities as reported in the government-wide statement of activities. The only element of that adjustment pertains to capital assets. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This adjustment represents the amount by which depreciation expense exceeded capital outlays (capital outlays exceeded depreciation expense) in the periods presented. The details of this adjustment are as follows: For the Fiscal Years Ended June 30, 2014 2013 Capital outlay Depreciation expense Loss on disposal Net adjustment to (increase) net changes in fund balances total governmental fund to arrive at change in net position of governmental activities $ (55,099) 22,030 4,444 $ (17,580) 9,894 - $ (28,625) $ (7,686) Note 4 - Cash Deposits and Investments Cash Deposits The Colorado Public Deposit Protection Act (“PDPA”) requires that all political subdivisions of the State deposit cash in eligible public depositories. Eligibility is determined by State regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is specified under the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool for all the uninsured public deposits as a group is to be maintained by another institution or held in trust. The market value of the collateral must be at least equal to 102% of the aggregate uninsured deposits. The Divisions of Banking and Financial Services within the Colorado Department of Regulatory Agencies are required by statute to monitor the naming of eligible depositories and reporting of the uninsured deposits and assets maintained in the collateral pools. - 27 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 4 - Cash Deposits and Investments (continued) Cash Deposits (continued) As of June 30, 2014, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2014 Carrying Balance Bank Balance Cash on hand Insured deposits $ 153,399 $ 101 105,265 $ 153,399 $ 105,366 As of June 30, 2013, GOCO’s cash deposits had bank and carrying balances as follows: June 30, 2013 Carrying Balance Bank Balance Cash on hand Insured deposits $ 145,222 $ 454 86,674 $ 145,222 $ 87,128 Because GOCO’s deposits are either FDIC insured or collateralized under the PDPA in single institution pools, none are deemed to be exposed to custodial credit risk under GASB 40, Deposit and Investment Risk Disclosures. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which a political subdivision may invest, which include:       Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts Local government investment pools - 28 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 4 - Cash Deposits and Investments (continued) State Treasurer’s Cash Pool GOCO invests its net Lottery proceeds with the State Treasurer. The State Treasurer has invested the monies held in the Trust Fund in the State Treasurer’s cash pool. A detailed composition of the cash and investments is available in the annual State Treasurer’s Report that also provides GASB 40 disclosures regarding investment risk for GOCO’s investments held by the State Treasurer. Summary Total cash deposits and investments are as follows: June 30, 2013 2014 Cash deposits Investments $ 105,366 41,452,983 $ 41,558,349 $ 87,128 29,030,503 $ 29,117,631 Investment Earnings Investment earnings are composed of the following: June 30, 2014 Investment income Net unrealized gain (loss) on investments held by the State 2013 $ 308,730 132,572 $ 231,267 (172,525) $ 441,302 $ 58,742 Note 5 - Lottery Proceeds Receivable As of June 30, 2014 and 2013, GOCO had distributions owed from the Lottery amounting to $10,518,911 and $10,005,058, respectively. For the receivable as of June 30, 2014, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2014 and May 2014, the month in which GOCO reached the Constitutional cap (Note 2). For the receivable as of June 30, 2013, this represents GOCO’s allocation of net proceeds from the Lottery for the months of April 2013 and May 2013, the month in which GOCO reached the Constitutional cap (Note 2). These revenues are both measurable and available to finance expenditures of the fiscal period. No allowance for doubtful accounts is considered necessary, as management believes the receivables are fully collectible. - 29 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 6 - Note Receivable On June 9, 2006, GOCO entered into a zero interest promissory note (with annually renewable one-year terms) with the City of Colorado Springs, Colorado, (the “City”) in the amount of $1,000,000 for the acquisition of Red Rock Canyon property in El Paso County, Colorado. Because the City utilized Certificates of Participation (“COPs”) to purchase the property, an easement on the property cannot be recorded until the COPs are paid in full. Accordingly, the easement has been placed in escrow and will remain there until the COPs have been paid in full by the City, estimated to be in 2018. Upon the due date of the note, the note will be considered paid in full without the transfer of any principal or interest to GOCO provided that: 1) the COPs have been redeemed, 2) all other terms (relating to items such as project scope, loan/grant conditions, budget, timeline, etc.) of the loan agreement have been satisfied, and 3) there is no event of default. Under GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, the note is considered an advance until these requirements are met. At the time the requirements are met, GOCO will reclassify the note to grant expense. Note 7 - Capital Assets An analysis of the changes in capital assets for the year ended June 30, 2014 follows: Balance at July 1, 2013 Equipment Software Furniture Leasehold improvements Retirements Balance at June 30, 2014 $ 79,455 108,939 34,533 14,560 237,487 (200,273) $ 17,256 37,843 55,099 (22,030) $ (25,929) (12,027) (3,500) (41,456) 37,012 $ 70,782 134,755 31,033 14,560 251,130 (185,291) $ 37,214 $ 33,069 $ (4,444) $ 65,839 Less: accumulated depreciation Total capital assets, net Additions An analysis of the changes in capital assets for the year ended June 30, 2013 follows: Balance at July 1, 2012 Equipment Software Furniture Leasehold improvements $ Less: accumulated depreciation Total capital assets, net $ 82,731 107,255 37,633 14,560 242,179 (212,651) Additions Retirements Balance at June 30, 2013 $ 15,896 1,684 17,580 (9,894) $ (19,172) (3,100) (22,272) 22,272 $ 79,455 108,939 34,533 14,560 237,487 (200,273) 29,528 $ - 30 - 7,686 $ - $ 37,214 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 8 - Authorized Grants and Expended Grants The following is a summary of grants authorized and grants expended from inception in 1993 through June 30, 2014 and 2013: Grants Authorized (Unaudited) Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Authorized Grants at June 30, 2013 $ 229,224,256 210,171,323 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 11,807,015 17,810,153 Transfers/ Deletions $ (22,842) (2,716,660) $ 241,008,429 225,264,816 236,321,396 13,175,889 (605,262) 248,892,023 243,285,917 1,170,174 15,507,836 - (114,488) - 258,679,265 1,170,174 (3,459,252) $ 975,014,707 $ 920,173,066 Funding Purpose Transfers/ Additions Cumulative Authorized Grants at June 30, 2014 $ Cumulative Authorized Grants at June 30, 2012 $ 213,470,352 192,263,127 58,300,893 $ Transfers/ Additions $ 15,900,000 22,190,503 Transfers/ Deletions $ Cumulative Authorized Grants at June 30, 2013 (146,096) (4,282,307) $ 229,224,256 210,171,323 230,730,589 6,405,134 (814,327) 236,321,396 235,849,013 1,170,174 7,765,775 - (328,871) - 243,285,917 1,170,174 (5,571,601) $ 920,173,066 $ 873,483,255 $ - 31 - 52,261,412 $ �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 8 - Authorized Grants and Expended Grants (continued) Grants Expended Funding Purpose Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary Cumulative Expended Grants at June 30, 2013 $ 211,656,404 179,693,932 219,443,128 Purpose 1 - Wildlife Purpose 2 - Outdoor recreation Purpose 3 - Competitive grants for open space Purpose 4 - Competitive matching grants to local governments for open lands and parks Non-categorized - Discretionary $ 213,042,023 1,170,174 $ 825,005,661 Funding Purpose Transfers/ Additions $ Cumulative Expended Grants at June 30, 2012 $ 196,945,741 168,472,721 205,741,493 200,292,365 1,170,174 $ 772,622,494 - 32 - 9,194,800 12,826,048 11,215,821 $ 220,851,204 192,519,980 230,658,949 8,173,542 - 221,215,565 1,170,174 41,410,211 $ 866,415,872 Transfers/ Additions $ $ Cumulative Expended Grants at June 30, 2014 Cumulative Expended Grants at June 30, 2013 14,710,663 11,221,211 13,701,635 $ 211,656,404 179,693,932 219,443,128 12,749,658 - 213,042,023 1,170,174 52,383,167 $ 825,005,661 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 9 - Commitments and Contingencies Operating Lease GOCO leases facilities, copy machines, vehicles, and a postage meter under operating leases that expire in July 2016, March 2017, August 2014, and June 2017, respectively. Total facilities and equipment rental lease expense for the Fiscal Years ended June 30, 2014 and 2013 was $155,533 and $143,028, respectively. Future minimum lease payments under the leases are as follows: Amount Year Ending June 30, 2015 2016 2017 $ 149,690 155,657 17,488 Total $ 322,835 Note 10 - Pension Plans As a political subdivision of the State, GOCO has elected not to use the Public Employees’ Retirement Association of Colorado (“PERA”). GOCO has established a retirement plan that consists of an employer-funded Defined Contribution Pension Plan and an employee-funded Deferred Compensation Plan. Defined Contribution Pension Plan As of July 1, 2002, GOCO amended and restated the State Board of the Great Outdoors Colorado Trust Fund Pension Plan (the “Pension Plan”). Unified Trust Company administers this plan at the direction of each employee for his/her own account. There are no age or service requirements determining eligibility, and participation is mandatory. Employer contributions are calculated based on 10.2% of each eligible employee’s gross salary (base salary plus performance awards). Assets of the Pension Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Pension Plan’s assets are not reflected as an asset of GOCO. GOCO contributed $88,186 and $87,921 to the Pension Plan for the Fiscal Years ended June 30, 2014 and 2013, respectively, which approximates the required contribution. - 33 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 10 - Pension Plans (continued) Deferred Compensation Plan The State Board of the Great Outdoors Colorado Trust Fund Deferred Compensation Plan (the “Deferred Plan”) was created in accordance with Internal Revenue Code Section 457. This plan is administered by Unified Trust Company at the direction of each employee for his/her own account. The Deferred Plan allows the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergencies. Contributions to the Deferred Plan are made by GOCO’s employees through a pre-tax payroll deduction. Contributions to the Deferred Plan are mandatory for all permanent employees, with a minimum required contribution of 6.2% of each employee’s gross salary. Contributions above 6.2% are allowed on a voluntary basis not to exceed a maximum permissible amount. Assets of the Deferred Plan are held in trust for the exclusive benefit of participating employees. Therefore, the Deferred Plan’s assets are not reflected as an asset of GOCO. Note 11 - Related Parties - State Agencies Board Composition and Approval of Grants The GOCO Board is composed of 17 members, 14 of whom are public members (2 from each congressional district) appointed by the Governor, subject to the consent of the State Senate. The 3 exofficio members include the Executive Director of the Colorado Department of Natural Resources, a representative for Parks and Outdoor Recreation issues designated by the Colorado Parks and Wildlife Commission (the “Commission”), and a representative for wildlife issues, also designated by the Commission. The Commission is the governing body of CPW. This state agency is under the administrative direction of the Colorado Department of Natural Resources. Under the Colorado Constitution, the GOCO Board is responsible for ensuring that expenditures are made for purposes stipulated, including investing in wildlife resources and investing in parks and outdoor recreation resources through CPW. In addition, CPW is eligible to apply for competitive grants for open space and natural areas of statewide significance, along with local governmental entities and non-profit land conservation organizations. Note 12 - Risk Management GOCO is exposed to various risks of loss related to torts; thefts of, damage to, or destruction of assets; errors or omissions; injuries to employees; and/or acts of God. GOCO carries commercial insurance coverage for all risks of loss, including workers’ compensation and employee health and accident insurance. GOCO has settled two claims since inception, which did not exceed commercial coverage. - 34 - �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Notes to Financial Statements June 30, 2014 and 2013 Note 13 - Tax, Spending, and Debt Limitations In November 1992, Colorado voters passed Section 20, Article X of the Colorado Constitution, commonly known as the Taxpayer’s Bill of Rights (“TABOR”). TABOR contains revenue, spending, tax, and debt limitations that apply to the State and all local governments. In the same general election, Amendment 8 was passed creating GOCO. The simultaneous passage of these two constitutional amendments raised questions as to whether there are irreconcilable conflicts between the two amendments. The General Assembly determined, in Section 24-77-102(17)(b)(ix) C.R.S. that the net proceeds from the Lottery that are deposited in GOCO are excluded from the scope of “state fiscal year spending” for purposes of TABOR. The Colorado Supreme Court, in response to an interrogatory from the General Assembly, approved that determination. TABOR is complex and subject to further legislative and judicial interpretation. GOCO believes it is in compliance with both of these constitutional amendments. - 35 - �REQUIRED SUPPLEMENTARY INFORMATION �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2014 Variance Favorable (Unfavorable) Original Budget Final Budget Actual $ 59,000,000 $ 59,000,000 $ 60,321,412 200,000 59,200,000 200,000 59,200,000 470,966 60,792,378 270,966 1,592,378 50,000,000 50,000,000 41,410,211 8,589,789 1,268,264 608,456 70,900 51,947,620 1,268,264 658,456 70,900 51,997,620 1,193,629 599,194 55,099 43,258,133 74,635 59,262 15,801 8,739,487 Excess of revenues over expenditures 7,252,380 7,202,380 17,534,245 10,331,865 Fund balance – beginning of year 54,441,547 54,441,547 30,565,219 (23,876,328) Fund balance – end of year $ 61,693,927 $ 61,643,927 $ 48,099,464 $ (13,544,463) Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures - 37 - $ 1,321,412 �STATE BOARD OF THE GREAT OUTDOORS COLORADO TRUST FUND Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2013 Variance Favorable (Unfavorable) Original and Final Budget Actual $ 56,000,000 $ 59,171,757 200,000 56,200,000 856,835 60,028,592 656,835 3,828,592 Expenditures Grants expended Personnel services and benefits Operating expenditures Capital outlay Total expenditures 42,000,000 1,208,973 638,027 25,000 43,872,000 52,383,167 1,219,825 615,974 17,580 54,236,546 (10,383,167) (10,852) 22,053 7,420 (10,364,546) Excess (deficiency) of revenues over expenditures 12,328,000 5,792,046 (6,535,954) Fund balance – beginning of year 42,113,547 24,773,173 (17,340,374) $ 54,441,547 $ 30,565,219 $ (23,876,328) Revenues State Lottery proceeds Investment earnings and miscellaneous income Total revenues Fund balance – end of year - 38 - $ 3,171,757 �INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audit contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”), as of and for the Fiscal Year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise GOCO’s basic financial statements, and have issued our report thereon dated December 1, 2014. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered GOCO’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of GOCO’s internal control. Accordingly, we do not express an opinion on the effectiveness of GOCO’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 39 - �Members of the State Board of the Great Outdoors Colorado Trust Fund and the Legislative Audit Committee COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether GOCO’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Governmental Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion of the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. EKS&H LLLP December 1, 2014 Denver, Colorado - 40 - �REQUIRED COMMUNICATIONS TO THE LEGISLATIVE AUDIT COMMITTEE To the Members of the Legislative Audit Committee: We have audited the financial statements of the governmental activities and major fund of the State Board of the Great Outdoors Colorado Trust Fund (“GOCO”) for the year ended June 30, 2014. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Governmental Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our contract dated May 20, 2014. Professional standards also require that we communicate to you the following information related to our audit. SIGNIFICANT AUDIT FINDINGS Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by GOCO are described in Note 2 to the financial statements. No significant new accounting policies were adopted, and the application of existing policies was not changed during Fiscal Year 2014. We noted no transactions entered into by GOCO during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Management’s use of estimates is disclosed in the notes to financial statements. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures in the financial statements are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. - 41 - �To the Members of the Legislative Audit Committee Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no such audit adjustments for the year ended June 30, 2014. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from GOCO’s management that are included in the management representation letter dated December 1, 2014. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to GOCO’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consulting accountant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as GOCO’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. We noted a certain matter that we reported to management of GOCO described in the Finding and Recommendation section of the report. OTHER MATTERS With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. - 42 - �To the Members of the Legislative Audit Committee This information is intended solely for the information and use of the Legislative Audit Committee, GOCO’s Board and management, and others within GOCO and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record upon release by the Legislative Audit Committee. EKS&H LLLP December 1, 2014 Denver, Colorado - 43 - � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Title A name given to the resource Great Outdoors Colorado (GOCO) Reports Description An account of the resource Since 1992, <a href="https://goco.org/about/colorado-parks-wildlife">GOCO</a> has invested a portion of the proceeds from the Colorado Lottery to help outdoor organizations, including Colorado Parks and Wildlife.<br /><br />GOCO published a <a href="https://goco.org/about/our-strategic-plan">new strategic pla</a>n in 2025<br /> <ul> <li><a href="https://goco.org/sites/default/files/GOCO_StrategicPlan_English.pdf">Strategic Plan (English)</a></li> <li><a href="https://goco.org/sites/default/files/GOCO_Summary_English.pdf">Executive Summary (English)</a></li> <li><a href="https://goco.org/sites/default/files/GOCO_StrategicPlan_Spanish.pdf">Strategic Plan (Spanish)</a></li> <li><a href="https://goco.org/sites/default/files/GOCO_Summary_Spanish.pdf">Executive Summary (Spanish)&nbsp;</a><br /><br /></li> </ul> Older strategic plans include: <a href="https://hermes.cde.state.co.us/islandora/object/co:40220/datastream/OBJ/view">2020</a>, <a href="https://hermes.cde.state.co.us/islandora/object/co:31381/datastream/OBJ/view">2015</a>, and <a href="https://hermes.cde.state.co.us/islandora/object/co:1305/datastream/OBJ/view">2002</a>.<br /><br /><a href="https://cpw.state.co.us/coloradosoutdoorsstrategy">Colorado's Outdoors Strategy</a> is an important collaboration between CPW, GOCO, and other partners. PDF documents: <ul> <li><a href="https://cpw.widen.net/s/jpgblrshdz/final-cos-full-strategy-with-appendices-2025-04">2025 Colorado's Outdoors Strategy</a></li> <li>Executive Summary in: <a href="https://cpw.widen.net/s/wjcwvnqprn/final-cos-executivesummary-2025-04-18">English</a> | <a href="https://cpw.widen.net/s/s5fmqg9zsk/cos-executivesummary-2025-05-23-esp">Spanish</a></li> </ul> <br /><br />The following annual reports are part of the CPW Research Library GOCO collection:<br /> <ul> <li><a href="https://cpw.cvlcollections.org/items/show/682">Colorado Parks &amp; Wildlife GOCO Investment Proposals</a>&nbsp;</li> <li><a href="https://cpw.cvlcollections.org/items/show/681">Colorado Parks &amp; Wildlife GOCO Annual Reports</a></li> <li><a href="https://cpw.cvlcollections.org/items/show/683">Great Outdoors Colorado Financial and Compliance Audits&nbsp;</a></li> </ul> Rights Information about rights held in and over the resource <a href="http://rightsstatements.org/vocab/InC-NC/1.0/">IN COPYRIGHT - NON-COMMERCIAL USE PERMITTED</a> Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Title A name given to the resource Great Outdoors Colorado Financial and Compliance Audits Description An account of the resource Each year, GOCO’s finances are audited by a third-party firm, with findings reported to the state legislature. Annual audits back to 2014 are available as pdf documents. Rights Information about rights held in and over the resource <a href="http://rightsstatements.org/vocab/InC-NC/1.0/">IN COPYRIGHT - NON-COMMERCIAL USE PERMITTED</a>