County s Role in School Building Programs

County s Role in School Building Programs 1

Presentation Overview County s Role in WCPSS Building Programs County s Financial Planning Process Current Capacity for Funding Future Programs 2 2

County s Role in School Building Programs Boards of Education and County Commissioners agree on the assumptions of the WCPSS building program and resulting needs / specific projects identified County develops a plan of funding for the agreed upon needs / projects Funding plan will include components and cash and debt funding A tax increase will likely be needed to provide the source of funding for repayment of debt and possibly operating costs of new schools 3

County s Debt and Capital Model County utilizes a financial planning model to evaluate the impact of future debt issuances. What the model is: A Predictive and Decision-making Tool identifies financial areas to monitor and issue to address Flexible easy to vary assumptions and generate multiple scenarios Constrained by Fiscal Policies provides red flags when key tolerances are exceeded What the model is not: A Budget Does not replace a budget; does not commit the County to a specific financial plan Precise Estimates bottom-line trends and based on input assumptions Static Updated at least twice a year during budget and after fiscal year-end results 4 4

Capital and Debt Management Policies Seven-year capital plan developed within context of debt policies and targets necessary to maintain AAA bond rating: Plan funded through dedicated revenue sources Target 80% Debt Funding; 20% cash 19% Minimum Fund Balance in the Debt Service Fund Debt repayment schedule that meets standards for AAA rated counties 5 5

Dedicated Revenue Sources for Capital and Debt Service Sales Tax Tax revenues from Article 40 and 42 sales taxes are statutorily required to fund school capital Total funds in 2013: $29 million Property Tax FY13 Property Tax: 53.4 cents; 15.5 cents designated for capital and debt service Total funds in 2013: $185 million Lottery Proceeds Use to fund debt service for bonds already issued Total funds in 2013: $10 million 6

General Obligation Debt What is general obligation debt? Debt backed by the full faith and credit of the County requiring commissioners to raise taxes to level necessary to ensure payment of the debt service once bonds are issued / sold Use of general obligation requires a voter referendum General Obligation Debt has lowest cost of borrowing If a tax increase is needed to fund debt and capital, the tax increase must be adopted by the Board of Commissioners during the annual budget process prior to any voter approved debt being issued 7

DETERMINING FUTURE CAPACITY 8

Capital Plan Assumptions May 2012 Assumptions: 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 202 Total Property Tax Rate 53.40 53.40 53.40 53.40 53.40 53.40 53.40 53.40 53.40 53.40 53.4 Property Tax Rate for Capital 15.50 15.50 15.50 15.50 15.50 15.50 15.50 15.50 15.50 15.50 15.5 Assessed Valuation Growth 1.03% 1.25% 1.50% 2.00% 2.50% 3.00% 3.50% 3.50% 3.50% 3.50% 3.50 Sales tax annual growth rate 3.60% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50 Investment rate 0.85% 0.85% 1.50% 2.00% 2.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00 Tax-exempt fixed interest rate 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50 Tax-exempt variable interest rat 0.30% 0.30% 0.50% 0.90% 1.40% 2.10% 2.10% 2.10% 2.10% 2.10% 2.10 Variable Rate Fees 0.57% 0.55% 0.55% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60 Total All-In Variable Rate Costs 0.87% 0.85% 1.05% 1.50% 2.00% 2.70% 2.70% 2.70% 2.70% 2.70% 2.70 Key assumptions used when forecasting future debt capacity 9 9

Current Debt Service Obligations $250,000,000 Debt Service Principal and Interest $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Fiscal Year 10 10

350,000 Debt and Cash Capacity without Tax Increase 300,000 $104 M $99 M $42 M $106 M $175 M $189 M $196 M $186 M 250,000 200,000 150,000 100,000 50,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Authorized and Issued Debt Service Planned Debt Service Expenditures Unauthorized and Unissued Debt Service Planned Cash Funded Projects Additional Capacity Cash Funded Projects 11 11

Capacity without a Tax Increase $1.04 billion through 2022 in additional debt capacity $51.2 million through 2022 in additional cash capacity Total additional capacity of $1.1 billion through 2022 Baseline Capacity FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Total Additional Debt Capacity 104,000,000 99,000,000 42,000,000 - - 100,000,000 165,000,000 178,000,000 184,000,000 175,000,000 1,047,000 Additional Cash Capacity 6,383,000 10,532,000 11,362,000 11,745,000 11,170,000 51,192 Total Additional Capacity 104,000,000 99,000,000 42,000,000 - - 106,383,000 175,532,000 189,362,000 195,745,000 186,170,000 1,098,192 12

Upcoming Referendum Use Existing Capacity to support Wake Tech $210.2 Million Program $200 Million GO Bonds, $10.2 Cash WTCC $210.2 Million Program FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Total WTCC Debt 29,250,000 75,000,000 58,000,000 37,750,000 200,000,000 WTCC Cash 3,185,000 3,305,000 3,710,000 10,200,000 Additional Debt Capacity 49,000,000 - - - - 100,000,000 165,000,000 178,000,000 184,000,000 175,000,000 851,000,000 Additional Cash Capacity 6,383,000 10,532,000 11,362,000 11,745,000 11,170,000 51,192,000 Total Additional Capacity 78,250,000 78,185,000 61,305,000 41,460,000-106,383,000 175,532,000 189,362,000 195,745,000 186,170,000 1,112,392,000 $49 million of debt capacity still available in FY 13 13

Projected Bond Sales Jan-13 Jan-14 Jan-15 Jan-16 Total Libraries 6,100,000 10,800,000 11,000,000 16,800,000 44,700,000 Open Space 11,000,000 10,000,000-21,000,000 Wake Tech 29,250,000 75,000,000 58,000,000 37,750,000 200,000,000 WCPSS - - - Total 46,350,000 95,800,000 69,000,000 54,550,000 265,700,000 Libraries and Open Space Bonds are funded Wake Tech is contingent upon successful Fall 2012 Referendum; not tax increase required WCPSS to be determined 14 14

WCPSS Program Modeled Assume additional funds for schools provided in 2014 If done in addition to WTCC $210.2 million program, requires 2.68 cent property tax increase for capital to be implemented with adoption of FY 14 budget WTCC & WCPSS (2.68 Cent Property Tax Increase To Provide Additional Capacity in FY14-17) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Total WTCC Debt 29,250,000 75,000,000 58,000,000 37,750,000 200,00 WTCC Cash 3,185,000 3,305,000 3,710,000 10,20 WCPSS Debt (Modeled) 126,000,000 134,000,000 140,000,000 140,000,000 540,00 WCPSS Cash (Modeled) 24,000,000 16,000,000 10,000,000 10,000,000 60,00 Additional Debt Capacity 100,000,000 165,000,000 178,000,000 184,000,000 175,000,000 802,00 Additional Cash Capacity 6,383,000 10,532,000 11,362,000 11,745,000 11,170,000 51,19 Total Additional Capacity 29,250,000 228,185,000 211,305,000 191,460,000 150,000,000 106,383,000 175,532,000 189,362,000 195,745,000 186,170,000 1,663,39 15

Future Capacity Beyond 2017 There is more capacity in FY 18 FY 22 There is still not sufficient capacity to fund $150 million per year for WCPSS and another $200 million for WTCC Requires 0.77 cents property tax increase to be implemented for FY 17 adopted budget WTCC & WCPSS (Long Range Building Program 2.68 cents in FY 14, 0.77 cents in FY 17) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 WTCC First Program Bonds 29,250,000 75,000,000 58,000,000 37,750,000 WTCC First Program Cash 3,185,000 3,305,000 3,710,000 WTCC Second Program Bonds 50,000,000 45,000,000 45,000,000 45,000,000 - WTCC Second Program Cash 5,000,000 5,000,000 5,000,000 - WCPSS Debt (Modeled) - 126,000,000 134,000,000 140,000,000 140,000,000 140,000,000 140,000,000 140,000,000 140,000,000 140,000,000 WCPSS Cash (Modeled) 24,000,000 16,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 Additional Debt Capacity 125,000,000 45,000,000 Additional Cash Capacity 20,000,000 4,000,000 Total Additional Capacity 29,250,000 228,185,000 211,305,000 191,460,000 200,000,000 200,000,000 200,000,000 200,000,000 295,000,000 199,000,000 16 FY 13-19 Debt and Capital Recommended Budget 16

Additional Revenue Authority ¼ Cent Authorized by General Assembly Estimated income: $25 million per year Requires authorization through a voter referendum Provides approximately $250 million in capacity $100 million in GO debt in FY 13 and FY 14 $25 million of cash funding in FY 13, and FY 14 Additional capacity to issue debt in later years of the model. 17

History of Tax Rate Increases for Debt Funded Capital Projects (In Cents) Total 2008 2009 2010 2011 2012 2013 2014 2015 $1.056 Billion CIP 2006 ($970 Million in Bonds) Capital and Debt Service 2.70 2.70 Operating 2.00 0.90 0.30 0.40 0.30 0.10 Total 4.70 3.60 0.30 0.40 0.30 0.10 $210 Million Capital Plans ($187 Million in Bonds) Capital and Debt Service (Libraries, Open Space and Wake Tech) 1.35 1.35 Libraries - Operating 0.36 - - 0.05 0.09 0.09 0.11 0.02 - Wake Tech - Operating 0.47-0.01 0.01 0.02 0.12 0.06 0.13 0.12 Total 2.18-1.36 0.06 0.11 0.21 0.17 0.15 0.12 County Buildings - Operating 0.21 - - - 0.01 0.18-0.02 - Criminal Justice - Operating 2.03 - - - - 0.72 1.18 0.12 - Total Capital and Debt Service 4.05 2.70 1.35 - - - - - - Total Operating Impacts 5.07 0.90 0.31 0.46 0.42 1.21 1.36 0.30 0.12 Total 9.12 3.60 1.66 0.46 0.42 1.21 1.36 0.30 0.12 Cells shaded green were not yet implemented. 18 18

THANK YOU! Johnna Rogers Wake County Deputy County Manager / CFO johnna.rogers@wakegov.com 919-857-9430 19