At a July 30 meeting, the Pagosa Area Water and Sanitation District (PAWSD) Board of Directors heard the results of the district’s clean 2025 audit, performed by Ronnie Farmer of RFarmer LLC.
PAWSD Comptroller Jack Dossett introduced the audit, thanking Farmer for his time and his history with the district, which Dossett noted helped his work.
District Manager Andrew Connor also thanked Farmer for his assistance, noting that both he and Dossett are new this year.
Farmer commented that the audit went “very well” and that the transition in leadership went smoothly.
The auditor’s letter included in the audit indicates that the audit found that the financial statements fairly present the activities of the district and that it identified no significant deficiencies or material weaknesses.
In response to a question about the district’s transfers of funds from its general fund to its water and wastewater enterprise funds and the rules surrounding this from board chairman Gene Tautges, Farmer explained that the general fund’s main source of revenue is property taxes and that, when the district’s voters successfully passed a ballot measure to reapply Colorado Taxpayer’s Bill of Rights (TABOR) restrictions to the district in May 2016, there was a possibility that the property taxes collected would not be enough to maintain transfers from the general fund to the enterprise funds.
He explained that in 2025, the fund generated approximately $250,000 in profit and that PAWSD transferred $500,000 from it, resulting in a $250,000 decrease in the fund balance.
However, he noted that, since the money went to other funds in the organization and the general fund balance of $1,435,905 at the end 2025 was still more than 30 percent of the $1,097,746 in expenditures for the fund, this transfer was not problematic and could be repeated in 2026 if the district desires it.
He added that the problem of the district not having enough property tax collections to maintain transfers is currently not occurring and is unlikely to happen in the future once PAWSD’s construction projects are complete and the proper rate levels are set to sustain the enterprise funds.
Farmer commented that he feels like the $500,000 transfer was potentially made because it was included in the district’s budget and that the district does not have to make this transfer if it does not need to, even if it is included in the budget.
He encouraged the board to read the management’s discussion and analysis section of the audit to gain a better understanding of management’s perspective of the district’s activities in 2025, although he stated that he would not review this section during the meeting.
Farmer explained that the water and wastewater funds together showed a $2,485,392 profit, which included a significant amount of depreciation of assets.
“Very solid, very sustainable, very well-managed funds,” he said, adding that these funds have been “very sound” for his entire time doing audits for the district and before.
Farmer stated that the monetary value of inventory items for PAWSD’s water enterprise fund has been consistently increasing for several years, reaching $1,423,008 in 2025.
He commented that the district might want to examine why this inventory is continually growing and potentially sell off some of these items to increase its cash available, although he added that the fund is not cash poor at present.
Farmer stated that the operating income showed a loss for the water fund of $196,231, a gain for the wastewater fund of $155,520 and an overall loss of $40,711.
However, he added that the water fund has depreciation expenses of $2,412,536 and the wastewater fund has depreciation expenses of $980,192, meaning that, when depreciation is added back, the water fund is generating a $2,115,425 profit and the wastewater fund is generating at $1,155,279 profit.
“Those are good numbers,” he said, adding that this pattern is consistent with prior years.
Tautges commented that the Snowball water treatment plant expansion project and the upgrades to the Vista wastewater treatment plan are almost done now and will be completed this year, adding that even though they are listed in the audit as 2026 projects, they are scheduled for completion in 2026, not to start.
Farmer commented that the cash flow statements for PAWSD’s operating activities do not reflect normal operations for the district due to the large capital projects it is undertaking.
He added that the district also received a significant amount of proceeds from debt that contributed to its cash flows and were used for capital projects.
Farmer then discussed the district’s long-term liabilities and debt service, which indicates that the district will have $2,754,342 in debt service requirements over the next three years for its current loans.
He added that none of the district’s funds in 2025 were overspent compared to the budget, demonstrating a “good job of budgeting” for the district.
PAWSD District Engineer Justin Ramsey stated that work on the Snowball plant is almost done and the district will not need to make any more payments to construction contractors for the project, while work on the Vista plant will likely continue for another two months.
Dossett noted that activity on these projects will still appear on the 2026 audit since it occurred after Jan. 1, 2026.
Tautges and PAWSD board member Alex Boehmer thanked Farmer for his work.
PAWSD board member Glenn Walsh asked if Farmer would be willing to work with the district going forward.
Farmer replied that he would be willing to do so and that he thought Dossett had a strong understanding of the debits and credits involved in the district’s finances.
josh@pagosasun.com
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