Department of Public Administration
College of Urban Planning and Public Affairs
University of Illinois at Chicago
PA 504: Budgeting for Public Management
Snyder—Fall 2014
CLASS PROJECT—THIRD TASK
The third task involves debt and the borrowing practices of the city. What is the total amount of outstanding debt for the city? How much is in general obligation bonds, revenue bonds, etc.? Howaredebt service costs distributed over time? What is their share of the budget in the past few years? How are the proceeds of debt used? If it is used for refinancing, is it used to reduce interest costs? Is it used to extend the term of the debt? How do principal payments (no interest payments) compare to depreciation costs for the past several years and in the future? What are the plans for construction of capital projects and issuing of debt in the future? You will most likely need to look at the Capital Improvement Plan (CIP). What are the city’s’ needs and priorities? Does the city appear to have the capacity to build needed facilities and issue the required debt? What is the city’s bond rating? Has it changed in recent years?
Also review the city’s debt and capital planning policies. Does it have a policy for the use of debt proceeds? For the term of debt?For using current revenues and reserves to finance capital projects instead of debt?For issuing and underwriting debt?For the evaluation of capital projects?Do the policies seem reasonable and adequate?
The emphasis of the first task was primarily descriptive and the gathering of information. The emphasis of the second task was evaluation, analysis and reform. For these two tasks the focus was on the operating budget. The focus of the third task is the capital planning and budgeting process. The final part of the third task should be an analysis of capital budgeting practices and the relationship between the operating and capital budgets. Has the city underfund or defer capital projects because of operating needs and limited revenues? What are the consequences of such practices? How does the city deal with trade-offs between capital and operating needs?
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