Debt Service Fund Current Financial Condition
The Debt Service Fund accounts for the receipts and disbursement of funds utilized for the retirement of City debt, including general obligation and certificates of obligations bonds.
The Debt Service Fund first quarter financial report reflects an ending undesignated fund balance of $1.03 million, which represents approximately 1.3 months of the Debt Service Fund 2022 budgeted operating expenditures ($208K in excess reserve – above the 1-month minimum fund balance reserve policy). The projected ending fund balance is 3.3 percent or $35k lower than the amended year-end fund balance of $1.07 million.
At the end of the first quarter, expenditures exceed revenues by $15K, mainly due to interest income coming in below budget.
Revenues vs Expenditures
- Taxes and Franchise Fees are coming in over budget due to an increase in delinquent collections.
- Interest Income is coming in under budget due to historically low interest rates.
- Expenditures are in line with the FY 2022 budget. Principal payments include the redemption of $495K of outstanding principal from the CO 2012 Series.
- Tax and Franchise Fees are coming in over budget due to the timing of property tax payments will occur primarily in December and January each fiscal year.
- Interest income is coming in under budget to historically low interest rates. Rates have since rebounded in the second quarter of FY 2022.
- The first debt service payment will be made in February which is typically interest only but will also includes the redemption of $495K in outstanding principal on the CO 2012 Bond Series. The second debt service payment occurs in August and will be for principal and interest.
As of the first quarter of FY 2021-22, the Debt Service Fund Budget has not been amended.
The graph above presents the scheduled debt service payments through FY2039. As outstanding bonds mature, the required annual debt service decreases, which provides debt capacity for the City to issue new bonds for capital projects.