Introduction to Public Financing Beyond Pensions


Session Handout

Introduction to Public Financing Beyond Pensions February 26, 2014 12:30 PM - 1:45 PM

Even though the funding of public pension systems seems to get all the media attention, in reality that is only one small element of state and local government finances. For example, governments need to invest in education, public safety, economic development, health care, infrastructure, etc. So what really goes into a typical government budget and how are these items financed?

In addition to taxes and user fees, the other major source of revenue for states and local governments is the capital markets and the tools of public finance. Arguably the largest fixed cost for state and local governments is debt service on bonded debt used for capital assets and infrastructure investments. Debt service represents a prior commitment, but with strong creditor pledges of earmarked resources.

This audio/webcast presents an introduction to the subject of Public Financing and covers the following topics:

  • Types of Public Debt and Debt Service Sources: General obligations bonds of governments; revenue bonds; limited tax or special purpose bonds; moral obligations; securitizations.
  • Structures: Fixed versus variable rates; interest only; level principal; term (project life); cash flow issuance or project specific; variations on all.
  • Use of Proceeds and Strategies: Capital projects; refinancings; budgetary reconciliation; local government subsidy (e.g., school construction; transit, etc.); privatization (project partnering); and pensions/OPEB.
  • Rating Agencies: Significance; meaning of ratings; how determined (local economy, financial condition of issuer, contagion, etc.), expansion of definition of “debt” to include UAAL and OPEB.
  • Bond Insurance: Significance, use and value.

Session Category: Public Plans
Credits: EA Non-Core: 1.50 CPD: 1.50
  • 1 . Lance J Weiss Gabriel Roeder Smith & Company
  • 2 . John Filan
  • 3 . Ronald D. Picur