On Oct. 22, State Auditor Hector Balderas released a list of 54 local government agencies—cities, school districts, villages, water conservation districts and the like—that are behind in filing their audits. Some—such as the Town of Lake Arthur, and the Ramah Water and Sanitation District—are nearly a decade behind. Most of the rest—including municipalities as big as Española and Albuquerque—haven't filed audit reports since 2007 or 2008.

The point of a list, Balderas says, is not just to call attention to these agencies' failure to comply with the state law requiring them to submit annual audit reports. It's also to publicize the more than $1 billion of public money his office estimates is going unaccounted for—and, Balderas hopes, to usher in a new era of fiscal accountability in which audits are seen as a necessity rather than an inconvenience.

"It frustrates me when they're always on time submitting a budget to get funding, but yet can't make the deadlines for securing an audit," Balderas tells SFR. "If you're willing to spend the money, you really should account for the dollars."

Some local governments, however, say submitting an annual audit report isn't that easy.

Each public entity, no matter how small, is responsible for contracting and paying one of the state's 72 Balderas-approved private audit firms to perform the audit. For tiny villages in rural areas, luring a big firm out to perform a complicated audit can be an uphill battle.

"There's a terrible shortage of auditors, and why would one want to do a little audit for an organization that has a very small budget?" Linda Coy, the director of the Northwest Regional Education Center #2, tells SFR.

Past financial troubles can make it an even harder sell. When Coy took over the cooperative's finances 2%uFFFD years ago, the district was a mess.

"The business manager was Kathy Borrego," Coy says. "That probably gives you a starting point."

(Earlier this year, Borrego pleaded guilty to embezzling more than $3 million from Jemez Mountain Public Schools, from which the cooperative severed itself in 2009 when the state's Public Education Department took over Jemez Mountain's finances.)

Coy says the cooperative's audits for 2006, 2007 and 2008 will be in Balderas' hands by Nov. 12, and that the 2009 audit will be easier since it won't involve the scandal-plagued Jemez Mountain. Even so, Coy says it's been hard to find an auditor.

"We're pretty small," Coy says. For relatively little money, she says, "Who wants to deal with a district that was in great turmoil?"

According to New Mexico Municipal League Communications Director Roger Makin, the economy has only exacerbated that situation.

"How can a city like Grenville, which has 25 residents, pay a [certified public accountant] to come in for a week?" Makin says. "It's kind of a catch-22: They are required to do certain things but, practically, some of those things can't be done in the current economic climate."

Such frustrations are common so, in 2009, the state Legislature passed a bill allowing public bodies with smaller budgets to participate in a tier system that requires less-extensive audits.

Obstacles notwithstanding, failing to submit a timely annual audit report is against the law, Balderas notes—and part of the reason for releasing a list of at-risk agencies is to remind people of that.

"The most effective purpose of that risk assessment is [to make] the people that are in charge of this government sober to the real fiscal conditions," Balderas says. "Everybody pleads ignorance or negligence but, a lot of times, the signs are there."

Failure to submit an audit can have repercussions beyond becoming a name on a list.

E David Atencio, the superintendent for Jemez Valley Public Schools, says the district passed a bond back in 2007 but, because of its failure to submit audit reports, has since then been unable to sell the bond. The district's at-risk designation also means resource-consuming monthly (rather than quarterly) reports to the Office of the State Auditor.

In the case of Jemez Valley, the district's audit reports have been clean for years, Atencio says. The problems lie with its one charter school, San Diego Riverside. Atencio says he learned only recently that Riverside's books are chaotic to the point of being "inauditable." But aside from browbeating the charter school, there's little Atencio, as district superintendent, can do.

"The laws don't give authority to the districts to say, 'Hey, get this done, or else,'" Atencio explains. All he can do, he adds, is "just sit there and cringe."

Balderas expresses similar frustration, and has long said he doesn't have the staff, funding or authority to fully enforce fiscal responsibility in the state.

The Legislature this year passed a law that allows the state to withhold certain types of funding from school districts that fail to submit timely audits. But of the 54 delinquent agencies on Balderas' list, only six are school districts. The Department of Finance and Administration continues funding municipalities with similar failings.

"Bad governments should not be treated the same way as good governments and, when they appropriate money, a lot of times I think they're treated the same," Balderas says. (DFA did not respond to SFR's questions by press time.)

And even though 54 governmental agencies are currently violating state law, Attorney General Gary King has declined to get involved, aside from offering Balderas legal representation should he take a non-compliant agency to court.

"We believe the auditor has the legal wherewithal to ensure these agencies do these audits," Phil Sisneros, King's
communications director, tells SFR. "His notifications to us don't mean that we necessarily are taking the cases."
Balderas says he's not trying to elicit action from the attorney general—just keep him informed.

"If I'm determining that there may be a heightened risk of fraud and abuse, then I would think the attorney general would have been interested in those 54 agencies," Balderas says. "There's a heightened potential of violations of law, there's increased fraud risks and there definitely is public confidence lost," he adds. "I think I'm doing the prudent thing, at least."

At-Risk Local Government Agencies: A Sampling

City of Albuquerque

Year of last audit:


Budget (FY 2011):

$891.8 million*




Chris Ramirez, the city’s communications director, tells SFR that Mayor Richard Berry, since taking office in December 2009, “made it a huge priority to have all the documentation to Hector Balderas’ office as soon as possible.” He says there is no definitive timeline for doing so, however. “It’s somebody else’s problem,” Ramirez says, citing the previous administration, “but on Dec. 1, it [became] Mayor Berry’s problem.”

Village of Ruidoso

Year of last audit:


Budget (FY ’09):

$10.2 million




“I don’t know how that happens, in a village this size, where you don’t have an audit for four years,” Ruidoso Mayor Ray Alborn, who took office in March, tells SFR. “I mean, that’s kind of crazy.” Alborn says the delinquency will be “rectified pretty quickly” and will be avoided in the future with more experienced finance staff.

Jemez Valley Public Schools

Year of last audit:


Budget (FY ’11):

$9.8 million ($1.1 million of which goes to San Diego Riverside Charter School)


approximately 260 students, according to recent test score results


Superintendent E David Atencio says the district has just completed two of its late audits and is working on the remaining two. While he’d like to see clearer definitions of authority and transparency, Atencio says Balderas has done a lot to raise awareness about the importance of audits. “Openness just forces greater accountability. When everybody knows everything, then there’s no hiding, there’s no lying, there’s no half-truth,” Atencio says.

City of Aztec

Year of last audit:


Budget (FY ’10):

$36 million




“Coming from North Carolina, where we’re very strict, I was very shocked to see that we were basically three audits behind,” Aztec City Manager Joshua Ray tells SFR. “Maybe the state wasn’t as aggressive, but it all comes down to our accountability: We weren’t doing our job effectively.”

Torrance County

Year of last audit:


Budget (FY ’11):

$12.1 million




County Manager Joy Ansley says that problems with auditors in 2007 led to delays in the rest of the county’s audits. But the 2009 audit will be submitted this week, Ansley says, “and our new auditors are confident that the FY ’10 audit will be submitted by the deadline, so it’ll be a moot point in a few weeks.”

*  SFR requested current budgets from each agency. Some were provided as full documents, while others are quoted from local officials.

** Populations are based on the most recent US Census estimates from 2009.