Professional Documents
Culture Documents
Chapter 8
Purpose of DSFs
To account for the accumulation of
resources for, and the payment of, general
long-term debt principal and interest
Required only if
Legally
mandated, or
Financial resources are being accumulated
for principal and interest payments in future
years
Debt Terminology
General obligation indicates full faith and
credit of the governmental unit pledged to
repay the debt
Revenue debt indicates specific revenue
source dedicated to repay the debt
Double barrel is revenue debt with
repayment guaranteed by full faith and
credit of governmental unit
Bonds
Notes
Typically less formal than bonds
May be
Short-term30
to 90 daysreported as fund
liabilities
Long-term5 to 10 yearsreported in GLTL
Warrants
Interest rates
Fixedmost
expenditures
Variablemore flexibility
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Funded reserves
Highest
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agent fees
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Financial Statements
Balance Sheet
Statement of Revenues, Expenditures,
and Changes in Fund Balance
Budget-to-Actual Statementoptional
would be presented as part of
Supplementary Information
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Retirement of Bonds
Points in Time
Before maturity
At maturity
After maturity
Known
as default
Want to avoid this
event!
Sources of Funding
Existing resources
New bond issues
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Callable bonds
Provision
early
Typically pay a premium to call bonds in
addition to accrued interest and principal
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Refunding Process
CURRENT REFUNDINGS
Debtor
Refunding (New)
Debt Issue
Investor
Refunded (Old)
Debt Issue
ADVANCE REFUNDINGS
Proceeds
of New
Debt Issue
Debt Service
Payments on Old
Debt Issue (over
remaining term
or until call date*
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Defeasance
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Types of Defeasances
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Defeasance:
Source of Funding vs. Reporting
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