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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 6 – Bonded Indebtedness
Sample (Illustrative, may not tie to exhibits)

Bonds Payable

Detailed supplemental bond information is disclosed in:

  • Schedule 2A – Miscellaneous Bond Information
  • Schedule 2B – Changes in Bonded Indebtedness
  • Schedule 2C – Debt Service Requirements
  • Schedule 2D – Analysis of Funds Available for Debt Service
  • Schedule 2E – Defeased Bonds Outstanding
  • Schedule 2F – Early Extinguishment and Refunding

General information

  • Bond Issue Name, Series 20XX
  • Purpose — To construct additional facilities to carry out the functions of Sample Agency
  • Issued MM-DD-YY
  • $XX,XXX,XXX.xx — all authorized bonds have been issued
  • Source of revenue for debt service — Fund 0001 Appropriations

Advance Refunding Bonds

Refunded $XXX,XXX,XXX.xx of Revenue Bonds — Series 1987:

  • Issued General Obligation Bonds — Refunding Series 20XX on MM-DD-YY
  • $XXX,XXX.xx — all authorized bonds have been issued
  • Average interest rate of bonds refunded — 12.5 percent
  • Net proceeds from Refunding Series $XXX,XXX.xx — after payment of $XX,XXX.xx in underwriting fees, insurance and other issuance costs. The net proceeds were used to purchase U.S. Government Securities and were deposited in an irrevocable trust with an escrow agent to provide for future debt payments on the 1987 Series bonds.
  • Additional $XXX,XXX.xx of 1987 — Series sinking fund moneys were used to purchase U.S. Government Securities. The proceeds were deposited in an irrevocable trust with an escrow agent to provide for all remaining future debt payments on the 1987 Series bonds
  • Advance refunding of the 1987 — Series bonds reduced the agency’s debt service payments over the next 20 years by approximately $XXX,XXX.xx
  • Economic Gain — $XXX,XXX.xx difference between the net present value of the old and new debt service payments
  • Accounting Gain — $XXX,XXX.xx accounting gain resulted from the advance refunding

Interest Rate Swaps

Effective swaps are reported in Note 7.

Using rates as of Aug. 31, 20CY, the debt service requirements of the variable rate (or fixed rate) bonds and associated net swap payments were estimated and are presented in the table below.

Fiscal Year Ending 08/31 Variable-Rate Bonds Interest Rate Swaps, Net Total
Principal Interest
*The agency is required by authoritative standards to assume the interest rate swap will not be terminated prior to maturity
XXX1 $                        - $ 4,918,447.50 $ 8,787,205.50 $13,705,653.00
XXX2 - 4,918,447.50 8,787,205.50 $13,705,653.00
XXX3 - 4,918,447.50 8,787,205.50 13,705,653.00
XXX4 - 4,918,447.50 8,787,205.50 13,705,653.00
XXX5 25,785,000.00 4,918,447.50 8,787,205.50 39,490,653.00
XXX6-XX10 70,730,000.00 20,695,551.50 37,288,561.50 128,714,113.00
XX11-XX15 147,955,000.00 7,653,960.50 7,377,127.50 162,986,088.00
XX16-XX20 25,500,000.00 4,475,515.00 309,071.50* 30,284,586.50
Total

$268,970,000.00

$57,417,264.50

$88,910,788.00

$430,003,705.50

Important: Enter all amounts as dollars and cents.

Pledged Future Revenues

GASB 48 makes a basic distinction between sales of receivables and future revenues, on the one hand, and the pledging of receivables or future revenues to repay a borrowing (a collateralized borrowing), on the other. The following table provides the pledged future revenue information for Sample Agency’s bonds for which a revenue pledge exists.

Pledged Future Revenue Information GO Bonds Revenue Bonds
Government Activities Government Activities Business-Type Activities Component Units
Pledged Revenue Required for Future Principal and Interest on Existing Revenue Bonds (1) $1,968.42 $1,968,281.42 $3,111,075.12 $  233,019.95
Term of Commitment Year Ending 08/31 (2) 2028 2028 2047 2041
Percentage of Revenue Pledged (3) 29.7% 79.7% 95.6% 100.0%
Current Year Pledged Revenue 2,748.23 2,748,490.23 40,255,735.09 1,000,971.87
Current Year Principal and Interest Paid 250.52 250,453.52 99,153.12 18,700.56

Pledged revenue sources:

  • Governmental activities — state appropriations and rental income on office facilities
  • Business-type activities — operating income from residential housing and bookstores
  • Component Units — sales and services of XYZ Foundation
(1) Schedule 2C.
(2) Year of final revenue bond maturity. See Schedule 2A — Miscellaneous Bond Information.
(3) For gross pledge, this is 100 percent (gross pledged revenue divided by gross pledged revenue). The net pledge calculation is net pledged revenue divided by total pledged revenue and other sources. See Schedule 2D – Analysis of Funds Available for Debt Service for further information.

Important: Enter all amounts as dollars and cents.

Build America Bonds

Build America Bonds (BABs) were created in 2009 as part of the American Recovery and Reinvestment Act (ARRA). Taxable bonds were issued by governmental entities (including state agencies) as Tax Credit BABs or as Direct Payment BABs:

  • Tax Credit BABs provide a federal tax credit to investors equal to 35 percent of the interest received from the bond issuer.
  • Direct Payment BABs provide a direct federal reimbursement to state and local governmental issuers equal to 35 percent of the interest paid on the bonds.

Authority to issue BABs expired on Dec. 31, 2010. Under the Budget Control Act of 2011, across-the-board sequestration took effect on March 1, 2013 — reducing the federal subsidy percentage for BABs interest payments.

A balance of $440.0 million of Taxable Revenue Bonds issued under the Direct Payment BABs program remained outstanding at fiscal year-end.

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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