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Program C: Debt Management

Program Authorization: La. Constitution, Article VII, Sec. 8; R.S. 39:1401-1410

PROGRAM DESCRIPTION

The mission of the Debt Management Program is to provide staff to assist the State Bond Commission to carry out its constitutional and statutory mandates.

The goals of the Debt Management Program are:

1. Account for and service state debt.

2. Prepare all documentation and perform steps to issue state debt.

3. Provide analytical review of applications from political subdivisions for approval to issue debt, levy taxes, or obtain loans.

The Debt Management Program provides staff, under the direction of a director, who, in turn, reports to the state treasurer, to carry out the day-to-day work of the State Bond Commission. The State Bond Commission is responsible for monitoring, regulating, and coordinating state and local debt and other related functions as required by law. The commission reviews and approves the issuance of bonds and other debt obligations by the state, directly or through any state board, agency, or commission or by any political subdivision of the state. The State Bond Commission staff performs work to support the commission's issuance of state general obligation debt or dedicated tax-supported debt issued by the state or any state agency. Additionally, the staff pays debt service, maintains accounting records of debt amortization and paying agents accounts, accounts for reimbursement contracts related to capital outlay projects, and assists local governments in the analytical review of loan applications and debt issuance.

 

 

YEAR

STATE-SUPPORTED

GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS TO MATURITY

 

 

DEBT SERVICE PER CAPITA

 

GENERAL OBLIGATION BONDED DEBT PER CAPITA

RATIO OF DEBT

SERVICE TO ASSESSED VALUE OF TAXABLE PROPERTY

RATIO OF DEBT

SERVICE TO FAIR MARKET VALUE OF TAXABLE PROPERTY

1997

$2,823,305

Not Available 1

Not Available 1

Not Available 1

Not Available 1

1996

$2,941,714

$676.10

$478.59

22.2%

2.0%1

1995

$3,377,945

$777.97

$539.12

27.9%

2.6%

1994

$3,494,583

$809.87

$569.41

29.2%

2.7%

1993

$3,560,631

$829.02

$586.19

32.0%

2.8%

1992

$3,687,007

$860.04

$582.77

34.1%

3.0%

1991

$3,753,844

$882.84

$596.79

34.8%

3.0%

1990

$3,871,193

$917.34

$611.18

36.3%

3.1%

1989

$4,278,095

$976.29

$638.03

39.8%

3.4%

1988

$4,690,790

$1,064.15

$681.03

44.6%

3.8%

1Statistics are unavailable at this time.

Source: Division of Administration, Office of Statewide Reporting and Accounting Policy, Louisiana Comprehensive Annual Financial Report For The Year Ending June 30, 1997

OBJECTIVES AND PERFORMANCE INDICATORS

1. In FY 1998-99, the Debt Management Program will ensure the timely payment of debt service on the state's bonds and monitor the compliance of fiduciary responsibility of paying agent/registrar banks.

1 If debt service is not paid timely, the state is in technical default on its debt, which will result in the lowering of the state's bond rating and inhibit the ability for the state to incur debt in the future.

2. In FY 1998-99, the Debt Management Program will provide staff services to the State Bond Commission in order to successfully complete a sale of approximately $200,000,000 of general obligation bonds and track and monitor approved lines of credit relative to general obligation bonds.

1 The decision to sell general obligation bonds is made by the State Bond Commission and is dependent upon various capital outlay needs, market conditions, the amount of net state tax supported debt that can be issued, etc.

3. In FY 1998-99 the Debt Management Program will prepare a report as required by the State Bond Commission's State Debt Limit Rule on the amount of Net Sale Tax Supported Debt (NSTSD).

1 NSTSD includes general obligation bonds secured by the full faith and credit of the State of Louisiana; debt secured by capital leases or immovable property payable by the state or annual appropriation f the state; debt secured by statewide tax revenues or statewide special assessments; bonds secured by self-supported revenues which, in first instance, may not be sufficient to pay debt service and will then draw on the full faith and credit of the State of Louisiana.

Explanatory Note: Louisiana Revised Statutes 39:1365(25) and 39:1402(D) limit the authorization and issuance, respectively, of general obligation bonds. This serves as a legal debt limit. Louisiana Revised Statute 39:1367 enacted pursuant to a constitutional amendment, provides that the State Bond Commission establish annually a limit on the net state tax-supported debt issued subject to certain percentages established in the statutes and based on general fund and dedicated funds revenues forecast by the Revenue Estimating Conference.

4. In FY 1998-99, the Debt Management Program will facilitate the process for local debt oversight by expediting the approval process for local government elections; monitoring and managing the expediting review process for eligible local government lease purchases.

1 The Watch List includes those entitites that are being m0onitored closely by Fiscal Review Committee (FRC). The FRC was created to review the financial stability of political subdivisions of the state and to appoint a fiscal administrator in those instances where it is reasonably certain that the entity will fail to make a debt service payment. Staff for the FRC is provided by the Debt Management Program.

Explanatory Note: Local debt oversight ensures that local governments do not overextend themselves or levy taxes and issue bonds in excess of their constitutional and/or statutory limits.

Explanatory Note: The approval process for local government elections is expedited in that these approvals do not have to follow normal approval process (submission to the commission as an agenda item).

5. In FY 1998-99, the Debt Management Program will provide assistance to local governments, state agencies, and public trusts with issuance of debt by conducting reviews of issues.

RESOURCE ALLOCATION FOR THE PROGRAM

SOURCE OF FUNDING

This program is funded with fees and self-generated revenues. Fees and self-generated revenues are derived from the following: (1) a $100 bond application fee and, if approved, one-fifteenth of one per cent of the appropriated amount for all public issues; and (2) a $1,500 bond application fee and, if approved, 1/8 of 1% of the appropriated amount for all private issues.

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$0

$1,401,089

9

 

ACT 18 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$0

9

 

None

 

 

 

 

 

$0

$1,401,089

9

 

EXISTING OPERATING BUDGET - December 10, 1997

 

 

 

 

 

$0

$12,600

0

 

Equipment/Major Repairs Adjustment(s)

$0

$4,416

0

 

Annualization of 1997-'98 Merit Pay Adjustment(s)

$0

$7,469

0

 

1998 -'99 Merit Pay Adjustment(s)

$0

$86,252

0

 

Attrition Adjustment(s)

$0

($1,916)

0

 

Retirement Rate Adjustment

$0

($158,152)

0

 

Reductions in various Expenditure Categories; Including Reductions to fully fund Salaries

$0

($29,838)

0

 

Realign budget to the Administrative Program to provide for salaries

$0

$0

1

 

Technical Adjustment - to transfer a position from the Administrative Program to place it in the appropriate program

 

 

 

 

 

$0

$1,321,920

10

 

TOTAL RECOMMENDED

 

 

 

 

 

$0

($79,169)

1

 

DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 94.3% of the existing operating budget. It represents 92.8% of the total request ($1,424,463) for this program. The decreased funding is primarily due to the expenditure reductions for professional services and other charges along with the realignment of budget to the Administrative Program.

PROFESSIONAL SERVICES

$14,296

 

Other Professional Services for Courtroom reporter for recording minutes of State Bond Commission

$15,000

 

Other Professional Services for acquiring statistical data for the Bond Data Bank

$176,800

 

Management Consulting for financial advisor to the State Bond Commission

 

 

 

$206,096

 

TOTAL PROFESSIONAL SERVICES

OTHER CHARGES

$500,000

 

Rebate of excess fees per Act 506 of 1990

 

 

 

$500,000

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$114,700

 

Department of Justice for legal services

$1,100

 

Department of Civil Service

 

 

 

$115,800

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

$12,600

 

Replacement Computers

 

 

 

$12,600

 

TOTAL ACQUISITIONS AND MAJOR REPAIRS


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