1 school district debt [email protected] 773-5932
TRANSCRIPT
2
CO Certificates CO certificates represent long-term debt with
the intent to pay it back utilizing the CO levy.
3
CO Certificates Complete your 5-year CO plan to ensure that
your district has sufficient resources available to take on a series of long-term debt payments
SDCL 13-16-9.2
3 Mill max regarding the CO levy
4
CO Certificates Set up a capital projects fund #41 for the
construction phase of the project
If there are different sources of funding, it is recommended to use a separate fund number for each capital project.
5
CO Certificates Place all means of finance for the project into
the Capital Projects Fund……such as: CO certificate issuance
Capitalized interest directly to CO Fund
Transfer from CO Fund Grants….energy grant Donations
6
CO Certificates Make all the payments towards the project
from the Capital Projects Fund…….even early payments such as architect fees, if possible
7
CO Certificates Spend issuance money in compliance with
bond covenants Furnishings??? Leftover money on stadium lights???
8
CO Certificates Adopt a spending priority for the Capital
Projects Fund…….which dollar is spent first, CO certificates???, transfer in??? Donations??
Consider operational unit field or a spreadsheet for tracking
9
CO Certificates The capital projects fund should have a
budget.
Most large projects fall within two school years.
10
GO Bond General Obligation bonds are similar to CO
certificates except the source of funding for repayment of the debt is a separate tax levy
11
GO Bond Most of the slides pertaining to CO
certificates will also apply to GO bonds. Such as the use of a capital projects fund, budgeting and spending priority.
12
GO Bond One significant difference from CO
certificates is that a GO bond will trigger the use of a separate Debt Service Fund #31
(separate fund for each bond issuance) GASB 54 states that debt service funds are
used to account for financial resources restricted to expenditure for principal and interest …
13
GLTD General long-term debt, such a CO
certificates and GO bonds, are tracked during the year in a separate self balancing set of accounts referred to as General Long Term Liabilities
Fund #00
14
GLTD Some of the accounts within Fund #00 are:
708 Unrestricted Net Assets501 Bond Payable
502 CO Certificates Payable
15
GLTD The balance of the General Long Term
Liabilities is added to Exhibit I at the end of the year by reconciling entry.
16
GLTD General long-term liabilities are reported on
Exhibit I (Statement of Net Assets) in two accounts as follows: Due within one year Due in more than one year
17
The Issuance Debt issuance dollars are placed into a Capital Projects Fund
as follows: 41-101 Cash 41-5000-614 Issuance Costs:
Bond Counsel Fee Underwriters Discount Fee Insurance
41-8150-619 Discount on Bonds Sold Or
41-5123 Premium on Bonds Sold 41-5121/5125 G.O. Bonds/Certificates Issued
18
The Issuance There generally is a premium (other financing
source) or a discount (other financing use) on each issuance. This arises when the “stated rate of interest” is more or less than the “market rate of interest”.
These accounts are amortized annually and the end of year balance may be blended with the liability account on Exhibit I.(193/473)
19
The Issuance The debt issuance accounts, 5121 and 5125,
are always reported at the full face amount stated on the debt instruments….. generally a large round number.
These accounts are reported as increases in liabilities on Exhibit I during the reconciliation process.
20
The Issuance Issuance costs, reported as 5000 Debt Service
Expenditures on Exhibit IV, are reported as an asset account called “Deferred Charge” (194) on Exhibit I.
Materiality is always a consideration.
21
The Issuance Sometimes the timing of a bond issue is such
that the tax levy cannot be put in place in time to have tax dollars available to make the first debt service payments. In that case, some of the issuance dollars are peeled off and placed directly into a Debt Service Fund to service the first debt service payment or two.
Cash G.O. Bonds Issued (OFS)
22
Servicing the Debt Governments have the option of recognizing
an expenditure and a liability in a debt service fund in the current period if “debt service fund resources have been provided during the current year for payment of principal and interest due early in the following year” (within 30 days)
23
Servicing the Debt An interest expense accrual should be
recognized on the G-W statements when a significant amount of time has elapsed since the last interest payment date. (materiality)
Debit Expense
Credit Liability