Jefferson County Financial Analysis. Jefferson County, Alabama Population: 660 thousand Home-rule.

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Presentation transcript:

Jefferson County Financial Analysis

Jefferson County, Alabama Population: 660 thousand Home-rule

Jefferson County, Alabama Population: 660 thousand Home-rule Median Household43 thousand Per Capita26 thousand Below Poverty16.5 % Income (2010 Census) Better than the state of Alabama average

Jefferson County, Alabama Population: 660 thousand Home-rule In November 2011, filed for the most Expensive municipal bankruptcy

Jefferson County, Alabama Population: 660 thousand Home-rule In November 2011, filed for the most Expensive municipal bankruptcy 4.1 billion. 3.1 billion relating to sewer work

Overview County historically enjoyed low financing costs Financially stable county High revenue stream due to taxes Financial troubles due to sewer project (1990s) – Corruption – Non-performing investments – Complex financial instruments

Revenue Sources (2010)

Sales Tax more than 10%

Expenditures (2010)

DEBT SERVICE IS HIGH BURDEN High government cost 67% of expenditures for government costs and debt service

Current Ratio (Liquidity Ratio)

CRISIS

Debt to Total Asset Ratio (Leverage Ratio)

Debt to Equity (Leverage Ratio) FINANCIAL CRISIS

Times-Interest Earned (Coverage Ratio)

Return on Net Assets POOR PERFORMANCE OF INVESTMENTS

Financial Troubles Expensive sewer overhaul related project started in the 1990s In 2003 take advantage of low financing costs and refinance sewer bonds from fixed rate to lower but floating rate Entered complex financial derivatives market to hedge against interest rate increase Bought complex financial instruments as their own investment

Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt DEBT SERVICE BURDEN

Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt Investments did not perform – Fees actually cost the county even more money

Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt Investments did not perform – Fees actually cost the county even more money County filed for bankruptcy – 4.1 billion dollars total – 3.1 billion related to sewer overhaul