Georgia’s bond sale last week totaling $977.8 million ($823.5 new debt) was a success, seeing the state maintain its AAA bond rating, but more importantly funding important infrastructure for the state in education, higher education construction and renovation, public safety and environmental improvements and various other infrastructure investments.
Here is a breakdown of the bonds that were approved by the Legislature in a current or previous state budget, signed by the governor and sold June 17.
K-12 bonds Department of Education: $283,275,000 — Funds K-12 construction in low-wealth, regular, exceptional growth categories and funds the capital outlay program at the $300 million entitlement level. Also funds five-year bonds totaling $14 million for local school technology upgrades. Funds $20 million in 10-year bonds for 259 new school buses. Georgia has one of the most successful local school construction programs in the U.S. Eleven states do not even fund local construction.
Board of Regents: $163,020,000 — About half of the total is for major repair and renovation improvements statewide ($40 million) and for the new Science Learning Center at the University of Georgia ($44.7 million). The sale includes design funds totaling $4.4 million for new future projects at Albany State and Savannah State, and $27.25 million for new facilities at Georgia Southern and Georgia State. Over $22.7 million is being spent to renovate existing facilities at 16 institutions around the state, with almost all of the renovations under $5 million.
Agricultural-related activities are the beneficiary of some $6.8 million in funds for Extension facilities, agricultural experiment station, and UGA campuses for Turfgrass research.
Additionally, $4.5 million is being spent to design and construct libraries or expansions in Villa Rica and Hogansville and to provide new technology for libraries statewide.
In agriculture, the Department of Agriculture will receive $5 million for renovations at the Atlanta Farmers Market and $3.035 million for improvements at the Ag Expo in Perry. The state forestry commission will receive $6.155 million for replacing firefighting equipment.
The Department of Public Safety will receive bond proceeds to purchase 173 new vehicles, some $10 million for the purchase of a new helicopter as well as renovations and retrofitting of an existing helicopter. For the GBI, bonds include funds for facilities repair, new vehicles and lab equipment. The Department of Corrections will receive bond funds totaling $30 million for security upgrades including enhanced locking controls and perimeter detection systems, facilities repairs and a water treatment facility. The Department of Juvenile Justice receives funds for renovations to an existing facility, and repairs and security upgrades statewide.
There is $50 million in bonds for the Environmental Finance Authority (GEFA) for matching funds for the Federal Clean Water Program, local water and sewer loan program and for reservoir construction loans. Also, there is $18.1 million for the Department of Community Affairs for reservoir loans.
The Department of Natural Resources lists bond proceeds of $5.8 million for the Tybee Beach restoration to match federal funds. Provides new vehicles, new construction and renovations at state parks and $10 million for land acquisition for Wildlife Management Areas. Georgia Soil and Water Conservation Commission will receive $600,000 for flood control rehabilitation in Milton.
The Department of Transportation is receiving $30 million to fund the Fast Forward Program and $8.195 million for rail projects tied to economic development.
The Georgia Building Authority is receiving $22 million for various projects around Capitol Hill including the planning of a new judicial building on the site of the present Archives building.
The Georgia World Congress Center is funded for renovations of its conference buildings, renovation for the Centennial Park Reflecting Pool and $17 million for a new parking deck.
Bonds will also fund improvements and repairs at Department of Developmental Disabilities and Behavioral Health, Department of Human Resources and public health facilities around the state.
So the $977.8 million bond sale and bond reselling will fund new facilities, improvements, repairs and renovations as well as purchase everything from computers to autos to a helicopter.
Fiscal checkup from the bond underwriters
Along with the supporting data on giving Georgia its AAA bond rating, the rating agencies offer analysis that can give the state a checklist of issues that will need attention as time goes by. The reports from the rating agencies accentuate the state’s strengths but identify areas that need improvement as well.
The OPEB liability
There are two types of benefits that state retirees receive. The two main funds dispense retirement payments from the Employees’ Retirement System and from the Teachers Retirement System. The benefit in effect at the time of hiring has been ruled a contractual benefit by the courts. The other benefit is healthcare under the State Health Benefit Plan.
While not a contractual obligation, the state has never considered not giving this benefit. Retirees who reach 65 are eligible for Medicare, and SHBP is considered a secondary payer after that point unless the member opts for some other policy. This benefit which the state accepts as a liability has been declared a bookable liability by national accounting standards under the heading. The state, however, does not consider TRS employees who are retired K-12 teachers to be state employees but local system retirees, but reports the OPEB liability as plan sponsor.
These national accounting standards now call for governmental entities to calculate these liabilities for healthcare and accumulate a reserve for that obligation. Many states have begun setting aside in a reserve funds to account for that liability.
In its bond report for Georgia prior to the recent bond sale, Moody’s and Standard and Poor’s noted Georgia’s OPEB liability and the fact that the state has not currently set aside any funds for this liability. Through plan and premium changes, Georgia has reduced its ERS OPEB liability to $3.8 billion and TRS liability to $10.8 billion.
Georgia has been on a “pay as you go” basis and writes a check each year for the total health benefits paid out by SHBP for ERS and TRS retirees. This year, that total was several hundred million.
State leaders need to begin putting aside OPEB liability payments both as good bookkeeping and as a hedge against difficult financial times that may come our way.
I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7092 (fax)
E-mail at Jack.Hill@senate.ga.gov
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Reidsville office: (912) 557-3811