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Program C: Debt Management

Program Authorization: La. Constitution, Article VII, Sections 6 and 8; R.S. 39:1401 et seq.

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 State Bond Commission was created pursuant to Article VII, Section 8 of the Louisiana Constitution of 1974. Its purpose is to monitor, regulate, and coordinate state and local debt and provide for the issuance of debt and arrange for notices and sale of bonds.

The goal of the Debt Management Program is to provide assistance to the State Bond Commission by preparing all documentation for the issuance of state debt, reviewing all applications from political subdivisions for approval to issue debt, levy taxes, or obtain loans, and accounting for and servicing state debt.

According to the U.S. Bureau of the Census, Louisiana had the 19th highest per capita debt outstanding among all states at the end of FY 1995-96. This is an improvement over FY 1994-95, when Louisiana ranked 14th highest among all states. The ratios of general obligation bond debt service requirements to assessed property value, to market value of taxable property, and to the total state population, which are useful indicators of the state's debt position, are shown in the following table.

 

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

1998

$2,767,509

Not available 1

Not available 1

Not available 1

Not available 1

1997

$2,823,305

$625.74

$428.21

19.2%

1.7%

1996

$2,941,714

$676.10

$478.59

22.2%

2.0%

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%

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, 1998

As of January 1999, Louisiana has the following bond ratings from the New York bond-rating firms.

Moody's A2

Standard & Poors A-

Fitch Investors A

OBJECTIVES AND PERFORMANCE INDICATORS

Unless otherwise indicated, all objectives are to be accomplished during or by the end of FY 1999-2000. Performance indicators are made up of two parts: name and value. The indicator name describes what is being measured. The indicator value is the numeric value or level achieved within a given measurement period. For budgeting purposes, performance indicator values are shown for the prior fiscal year, the current fiscal year, and alternative funding scenarios (continuation budget level and Executive Budget recommendation level) for the ensuing fiscal year (the fiscal year of the budget document).

 

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

$1,321,920

10

 

ACT 19 FISCAL YEAR 1998-1999

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$0

0

 

None

 

 

 

 

 

$0

$1,321,920

10

 

EXISTING OPERATING BUDGET – November 20, 1998

 

 

 

 

 

$0

$9,809

0

 

Annualization of FY 1998 – 1999 Classified State Employees Merit Increase

$0

$6,351

0

 

Classified State Employees Merit Increases for FY 1999 – 2000

$0

$21,438

0

 

Acquisitions and Major Repairs

$0

($12,600)

0

 

Nonrecurring Acquisitions and Major Repairs

$0

$29,327

0

 

Salary Base Adjustment

$0

$2,500

0

 

Other Annualizations – Educational Training relating to Debt Issues, Financial Statements, and requests to issue and consolidate debt.

 

 

 

 

 

$0

$1,378,745

10

 

TOTAL RECOMMENDED

 

 

 

 

 

$0

$56,825

0

 

DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 104.3% of the existing operating budget. It represents 98.0% of the total request ($1,405,669) for this program. The net increase in funding is primarily due to salary adjustments and acquisitions.

PROFESSIONAL SERVICES

$14,296

 

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

$14,500

 

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

$176,800

 

Management Consulting for financial advisor to the State Bond Commission

 

 

 

$205,596

 

TOTAL PROFESSIONAL SERVICES

OTHER CHARGES

$500,000

 

Rebate of excess fees per La. R.S. 39:1405.1

 

 

 

$500,000

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$38,804

 

Department of Justice for legal services

$19,394

 

LSU Interim Program (Student)

 

 

 

$58,198

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

$21,438

 

Replacement Computers

 

 

 

$21,438

 

TOTAL ACQUISITIONS AND MAJOR REPAIRS

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