VGFOA 2010 Innovation Award: Debt Management Tool VGFOA Presentation: June 2011
Debt Management Issues Augusta County Service Authority has 12 independent water systems and 9 independent sewer systems Lots of regulatory pressure to upgrade facilities: –3 largest WWTPs needed ENR upgrades for Ches. Bay –5 water supplies needed membrane filtration because now under the influence of surface water Therefore, many opportunities from VDH and DEQ to award us subsidized loans paired with grants, especially in disadvantaged areas
Debt Management Issues Augusta County Service Authority has 25 outstanding bonds and loans $25 Million recently borrowed for 3 largest WWTPs ENR upgrades and Authority is now at “debt capacity” because bond revenue covenants are now driving rate increases Therefore, being able to easily report on debt for Board discussions, the budget process and financial statement disclosures is very important
Creation of Debt Management Tool Amortization schedules formerly kept in separate worksheets for budget and audit purposes and were time-consuming to keep updated No IT staff for the Authority so a college intern was hired during Christmas Break to convert files into one master spreadsheet –Staff came up with the vision and design, –Intern Googled the internet to find a solution, –Staff reviewed the work, and –Intern documented the work so that updates could be made by staff
Features of Debt Management Tool Audit work papers: Current versus non-current debt totals for face of basic Statement of Net Assets Annual requirements to amortize debt by year and summarized for five year segments List of each debt issue with outstanding principal and amount due within one year
Features of Debt Management Tool Audit work papers: Reconciliation between disclosure tables G/L to amortization schedule reconciliation Portfolio interest rate average for Capitalized Interest calculations Interest payable support calculations New debt issue amortization schedules for auditors
Features of Debt Management Tool Budget calculation and presentations: Budget graph for Board: Debt “hump” Interest expense for Operating Budget Summarize by year and water versus sewer, interest and principal payments for rate calculations and to insure we make bond revenue covenants for a six year financial plan Used this year to quickly determine the effect of not drawing several debt issues in full for budget discussions
Features of Debt Management Tool Used throughout year: Periodically verify G/L for outstanding debt or interest payable amounts Can monitor due dates for debt issues from a cash flow perspective Continuously update amortization schedules and keep notes in one place for individual bond issues Use to support BAB interest subsidy reimbursement requests
Thank you! For a copy of the Debt Management Tool, Debbie White at