north carolina capital improvement program office of state budget and management 1 capital...

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North Carolina Capital Improvement ProgramOffice of State Budget and Management

Capital Improvement Program

OFFICE OF STATE BUDGET AND MANAGEMENTAnnual Conference

October 17, 2007

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Outline

Review of the 2007 Legislative Session Funding History 2007-08 Capital Budget Special Indebtedness & Debt Affordability

Special Indebtedness (COPs) 2004-07 2003 Repair & Renovation Cops Changes to the Executive Budget Act Capital Improvement Plan and the 2008-09

Budget Process

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History of Authorized Capital Funds

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Fiscal Year

To

tal

Cap

ital

Fu

nd

s (m

illi

on

s)

SpecialFinancing

R&R ReserveAccount

Appropriations

$259.9

$31.2

$776

$590.2

$180

$1,147.7

$1,044.9

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History of R&R Funding

$135 $145

$90 $100

$8.6 $0

$315

$77

$125

$222

$145

$0

$50

$100

$150

$200

$250

$300

$350

97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08Fiscal Year

R&

R F

un

din

g (

mill

ion

s)

R&R Reserve Account Special Financing (COPS)

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2007-08 Capital Budget

State Agencies UNC System Totals

Appropriations 97,592,100 133,149,000 230,741,100

Debt Financing 188,007,800 481,140,225 669,148,025

Approved Budget 285,599,900 614,289,225 899,889,125

Unfunded 211,594,362 649,835,000 861,429,362

Previously Funded 6,724,233 55,104,225 61,828,458

Receipts/ Gifts 62,022,998 40,100,000 102,122,998

subtotal 565,941,493 1,359,328,450 1,925,269,943

UNC Self-liquidating - 334,681,000 334,681,000

subtotal 565,941,493 1,694,009,450 2,259,950,943

Repairs & Renovations 78,300,000 66,700,000 145,000,000

Total 644,241,493 1,760,709,450 2,404,950,943

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Capital Improvements & Debt Affordability

CIP impacted by State’s Debt Capacity Debt ratios and retirement of existing debt Availability of unallocated reserves Revenue Projections

Debt Related Considerations Amount of bond/COPs proceeds required Economic benefit of the project and revenues

generated from project Balance “Pay-as-go” and debt

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Debt Affordability Advisory Committee Recommendations

Debt Service/Revenue Target of 4%

Rebuild Unallocated Reserves Six-year Capital Improvement Plan

Fiscal Year 2007 2008 2009 2010 2011

Total Additional Debt Capacity per Year 1,032.1 149.1 50.4 56.3 520.2

Debt Capacity Available each and Every Year 384.0 384.0 384.0 384.0 384.0

Net Tax-Supported Debt Capacity Using 4.0% Target Ratio (Millions of dollars)

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2007 COPs Authorized

Total - $669,148,025 Maximum prior to 7/1/08 - $284,360,750 Additional 2008-09 - $245,030,900 Additional 2009-10 - $139,756,375

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Special Indebtedness - COPs

Legislature authorizes debt DOA, OSBM, and State Treasurer review and

must concur to bring to: Council of State for Approval COPS debt sales are scheduled to meet cash

flow requirements of the projects and Stay within Debt Affordability limits

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Current COPs Projects

2005- 14 projects including land purchases, total authorization $706 million includ. Prison and Psychiatric Hospital

2006- 11 total projects; 10 that may begin to requisition funds, including land purchases, total authorization $719,168,700

2007-17 projects including 1 project for land and 1 supplement to a prior project. Not yet authorized by Council of State as of 10/17/07.

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COPs Sales

Initial sale July 2005 for $200 million 2nd sale Oct 2006 for $201 million Recent sale Oct 2007 for $200 million Next sale planned for Spring 2008

Debt sales are timed based on the cash flow needs provided by the agencies and universities to OSBM.

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COPs Funding Status

To date $385,606,779 has been expended on 2005 and 2006 projects

2005-$346,870,936 2006- $38,735,843 The first two projects scheduled to be completed

are Prison #6 and the Central Regional Psychiatric Hospital in Butner, which fall under the 2005 projects

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Reminders for COPs

Private Use- The private use of facilities funded by special indebtedness is greatly restricted as long as the debt is outstanding. Any private use needs OSBM’s approval to verify the percentage used and to make sure the tax-exempt status of the debt is maintained.

Copies of all invoices must be kept for six years after the debt is repaid. If the debt is repaid in 20 years, invoices must be kept for 26 years.

It is the State’s policy that proceeds from special indebtedness cannot be used to compensate or support the salaries of in-house facilities staff or other state employees for services related to completing the projects.

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Cash Flows

Projected cash needs are essential in timing debt sales, so any updated information on the project and the progress of it is always appreciated.

Updated cash needs will be requested at the beginning of each quarter and should show the cash need per month through the end of the project.

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2003 Repair & Renovation COPs

History In 2003-04, the Legislature authorized special

indebtedness of $300 million for R&R

No R&R funds for the previous two legislative sessions

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2003 R&R COPs Issuances

COPS Funds IssuedApril 2004 - $125,000,000August 2006 - $100,000,000September 2007 – Final sale of $75,000,000

authorized by Council of State

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2003 R&R COPS - Project Status

Project Status as of 10/10/07

Number of Projects Percent of Total Projects

100% complete 119 28%

75% to 100% complete 175 41%

50% to 75% complete 41 10%

25% to 50% complete 24 6%

Less than 25% complete 53 12%

Projects not started 18 4%

Total 430 100%

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2003 R&R COPs - Funding Status

Funding Status as of 10/10/07 $302,024,739 total budget of COPS $234.2 million allotted to agencies/campuses $216.5 million expended $6.9 million average 2007 monthly expenditures

$3.9 million average monthly expenditures by state agencies

$3 million average monthly expenditures by UNC system entities

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2003 R&R COPs – State Agencies

State Agency Detail as of 10/10/07.Expenditures of $99,047,934Allocations of $143,407,475Allotments of $107,781,159Projects are 69% complete

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2003 R&R COPs - Universities

University System Entities Detail as of 10/10/07.Expenditures of $117,467,895Allocations of $158,657,204Allotments of $126,493,007Projects are 74% complete

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Changes to the Executive Budget Act

CIP – Budget Support Document Space Analysis Cash flows Construction timelines Maintenance/operating costs or savings for first 5 years

New Reversion Provisions 1 Year for Planning; 2 Years for Construction OSBM may grant 12 month extensions Otherwise, project authorization lapses

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Changes to the Executive Budget Act

Project Reserve Account New Capital Project Fund – Excess Capital Appropriations Budget Director can use for emergency R&R or for cost

overruns Report actions to Gov Ops

C&E Requests Consultation with Gov Ops no longer required Council of State approval is still required

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Capital Planning ProcessLong Session Biennial Budget

Even Numbered Years

August Budget Instructions Sent to Agencies

October Agencies Submit Capital Requests to OSBM

October OSBM Develops a Capital Needs Inventory

November OSBM Meets with State Agencies to Discuss Capital Requests and Agency Prioritization

November-December OSBM Reviews Capital Project Requests and Applies Criteria to Develop a Prioritized List of Projects.

December-January OSBM Develops a Six-Year Capital Improvement Plan that Includes Funding Sources and is Consistent with the Debt Affordability Study.

Odd-Numbered Years

February Finalize CIP with Governor and Governor's Staff

February-March Present the Final Capital Plan to the General Assembly with Biennial Budget

February-July General Assembly Regular Session - Consideration of Governor's Recommended Capital Budget

July Certification of Biennial Capital Budget

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Capital Planning ProcessShort Session Budget

Even-Numbered Years

January Budget Instructions Sent to Agencies

February Agencies Submit Capital Requests to OSBM

February-March OSBM Meets with State Agencies to Discuss Capital Requests and Agency Prioritization

March

April

OSBM Reviews Capital Project Requests and Applies Criteria to Develop a Prioritized List of Projects

Finalize Short Session Capital Budget with Governor and Governor's Staff

May-June General Assembly Short Session - Consideration of Governor's Recommended Capital Budget

July Certification of Short Session Capital Budget

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Repair & Renovations Process

Every Year

July Budget Instructions Sent to Agencies.

August Agencies Submit R&R Requests.

August-September OSBM Meets with Agencies to Discuss Requests and Prioritization.

September OSBM Applies R&R Funding Allocation Model.

September-October OSBM in Collaboration with State Construction Recommends R&R Projects for Funding.

October OSBM Consults with Gov Ops on Proposed R&R Allocation for State Agencies.

October-November OSBM Makes R&R Funds Available to State Agencies for Approved Projects.

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Conclusions

General Assembly Recognizing Need for Capital Planning and Consistent Capital Funding

Increased use of Debt financing Multi-Year Funding of projects

Appropriations for Planning/Design Debt spread over several years for Construction

Within Debt Affordability Guidelines Change is the Nature of Capital Improvements

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(919) 733-0640 (fax)http://www.osbm.state.nc.us

Contacts:Jim LoraAssistant State Budget Officer(919) 807- [email protected]

Adam BrueggemannCapital Budget Analyst(919) 807- [email protected]

Kristen CrossonCapital Budget Analyst(919) 807- [email protected]

Jennifer WimmerCapital Budget Analyst(919) 807- [email protected]

north carolina capital improvement program office of state budget and management 1 capital...

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