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Funding Sources: Managing Multiple Funding Sources on Public Projects

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e-Builder.net 800.580.9322 info@e-builder.net | support@e-builder.net WHITE PAPER To Request an Online Demo Visit: e-Builder.net or call 800.580.9322 RISKY BUSINESS By Jeffrey Eaton, Chief Financial Officer, New Mexico Public School Facilities Authority On public projects, there is great risk involved when handling certain funding situations particularly unless you have a robust project management system in place. Our school projects that have state funds in them require a local school district participation, or "district match." If we don't complete the project with the right ratio of spending, one side/partner (state or school district) owes the other money. It seems simple, but it can get you out on a limb that's hard to come back from. Say, for example, a partner has a cash shortage. You, on the other hand, have plenty of cash to get the project started. You lose sight of who is paying what, and at the end you realize you have paid 75% of the $40 million project when you should be 50-50. You have paid $30 million! Now, you have to ask your partner to pay you back $10 million to get back to 50-50. This is an extreme example, and has never happened on that scale of disproportion, but it drives home the point—if you don't have tight controls and monitoring every step of the way, you can find yourself in a tough spot financially that can take time to recover from fully, if ever.

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