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, e-mail Debbie White at dwhite@co.augusta.va.us