Capital Finance Metrics and 2021 Capital Budget Bill Walker - - PowerPoint PPT Presentation

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capital finance metrics and 2021 capital budget bill
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Capital Finance Metrics and 2021 Capital Budget Bill Walker - - PowerPoint PPT Presentation

Sep 24, 2023 92 likes •501 views

Capital Finance Metrics and 2021 Capital Budget Bill Walker Financing the CIP Recommended financing plan More cash support Understand why Questions Hold questions to end Unless Im losing you Six-Year CIP Years 2-5

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Capital Finance Metrics and 2021 Capital Budget Bill Walker

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Financing the CIP

  • Recommended financing plan
  • More cash support
  • Understand why
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Questions

  • Hold questions to end
  • Unless I’m losing you
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Six-Year CIP

  • Years 2-5 change
  • Year 1 locked in 2021 budget
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Capital Projects Fund Debt Service Fund Operating Fund

A B

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Question for Next Time

  • Proposed 2021 budget
  • What spending plan…

–Recommendation? –Alternative?

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Agenda

  • How developed
  • The plan
  • Alternative
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How Developed

  • Commission priorities
  • Metrics
  • Targets
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Priorities

  • Smooth service charge increases
  • Limit debt
  • Handle the unexpected
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Metrics

Measure performance against priorities … What targets?

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Unexpected

Fund Balances Two kinds of risk

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Timing Risk

Daily Balance

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Our Timing Risks

  • Delayed loan receipts
  • Planned becomes crisis
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Timing Risk Metric

Variable

with size of

regular expenditures

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Risks

Timing & Unplanned

(expenditures or lost revenues)

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Unplanned Risk

Expenditure Risk Revenue Risk

20% | $8m 10% | $4m 25% | $10m 70% | $30m 2% | $1m

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Timing Risk Metric

Annual Closing Balance

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Target Zones

  • Green: Fine
  • Yellow: Explain
  • Red: Fix
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If Last Year’s Funding Plan

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Proposed Plan

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Unplanned Risk Metric

Period Closing Balance minus Timing Reserve

(average annual spending)

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If Last Year’s Funding Plan

25% | $10m 70% | $30m 2% | $1m

Expenditure Risk Revenue Risk

20% | $8m 10% | $4m

Capital Fund Closing Balance Minus Timing Risk Factor

(Percent of Planned Period Revenue)

  • 14% | -$4.6m
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Proposed Plan

25% | $10m 70% | $30m 2% | $1m

Expenditure Risk Revenue Risk

20% | $8m 10% | $4m

Capital Fund Closing Balance Minus Timing Risk Factor

(Percent of Planned Period Revenue)

+ 14% | + $5.7m

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Proposed Plan == Last Year’s Plan

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Proposed Plan == Last Year’s Plan

Expenditure Risk

?

Revenue Risk

?

Debt Fund Closing Balance Minus Timing Risk Factor

(Percent of Planned Period Revenue)

+ 12% | + $13.1m

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Debt Metrics

Relevant to the Commission? Percent CapEx Financed with Debt

(three year average)

Total Outstanding Principal

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Debt

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Why Proposal?

Solves Capital Fund Risk Problems Begins Lowering Use of Debt But what about service charges?…

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Capital Projects Fund Debt Service Fund Operating Fund Service Charges

A B S Y

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Capital Projects Fund Debt Service Fund Operating Fund Service Charges

Y A B S

Y2021 - Y2020

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Capital Projects Fund Debt Service Fund Operating Fund Service Charges

Y A B S

Y2021 - Y2020

__________________

S2020

Percent increase in service charge support for the capital program from 2020 to 2021:

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Capital Projects Fund Debt Service Fund Operating Fund

Operating Expenditures

Service Charges

Y A B S

Y2021 - Y2020

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S2020

Percent increase in service charge support for the capital program from 2020 to 2021:

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Proposed Plan

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The Plan

  • Significantly greater transfer to capital projects fund
  • Same transfer to debt service fund
  • Reduce borrowing in 2025 ($3m) & 2026 ($8m)
  • 3% year-over-year service charge increases to fund it
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Alternative?

Needs to help the capital fund! Limit 2021 service charge increase?

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Capital Projects Fund Debt Service Fund Operating Fund Service Charges

Y A B S

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Capital Projects Fund Debt Service Fund Operating Fund Service Charges

Y A B S Proposal Increase A Leave B Unchanged Alternative Increase A Decrease B to Offset

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Question for Next Time

Recommendation Alternative Operating Fund Transfer to: Capital Fund (A) $1,486,000 Debt Service Fund (B) $16,552,000 $16,027,000 Debt Service Fund Timing Risk Yellow Zone Debt Service Fund “Unplanned Reserve” (% of revenue) 12% 11% % Increase in Service Charges Needed: 2021 3% 2% 2022 3% 4%

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Which Option Should We Propose?

Recommendation Start “high” with room to lower Alternative Start “low” with possible desire to raise