Debt Management Policy

Debt Management Policy

 

Goal

 

To provide a debt management policy which recognizes the capital improvement needs of a growing County balanced by the taxpayer’s ability to pay.  The County will, at all times, manage its debt and sustain its financial position in order to seek and maintain the highest credit ratings possible.

 

 

Purpose 

The basic purpose of this policy is to provide a conceptual framework for the issuance and management of debt.

 

Factors Important to the Issuance of Debt 

  • Legal constraints on debt capacity and various financing alternatives.
  • The urgency of the proposed capital improvement.
  • Cost of delayed construction.
  • Willingness and financial ability of the taxpayers to pay for the capital improvements.
  • Proper balance between internal (pay as you go basis) and external (debt) financing based on prevailing interest rates, cash on hand and other market considerations.   
  • Reimbursement Resolutions should be utilized in order to minimize the number of issues sold and frequency of sales in a 12 – 18 month period in order to minimize costs. .  However, use of Reimbursement Resolutions should be based on General Fund balance goals and policy objectives.
  • The financial condition of the County.
  • The types, availability and stability of revenues to be pledged for repayment of the debt.
  • Type of debt to be issued.
  • The nature and asset life of the projects to be financed.

 

Debt Management Policies 

  1. Capital improvements may be financed by debt to be repaid from available revenue sources pledgeable for same.
  2. Cash surpluses, to the extent available and eligible for the purpose, should be used to finance scheduled capital improvements as outlined in the fund balance policy.
  3. The County may issue debt for the purposes of constructing or acquiring capital improvements and for making major renovations to existing capital improvements; or to retire or defease existing debt to achieve interest cost savings. 
  4. All capital improvements financed through the issuance of debt will be financed for the lesser of useful life of the improvements or 30 years.
  5. Operating expenses will not be incurred from dollars being paid by a debt issuance.
  6. The County will not construct or acquire a public facility without including the  operation and maintenance costs of the facility in the annual budget.
  7. The County will ensure that an adequate system of internal control exists so as to provide reasonable assurance of compliance with appropriate laws, rules, regulations, and covenants associated with outstanding debt.
  8. Revenue sources will only be pledged for debt when legally available.  In those situations where those revenues have previously been used for operation and maintenance expenses (general operating expenditures), they will only be pledged for debt when other sufficient revenue sources are available to replace those sources to meet operation and maintenance expenses (general operating expenditures).
  9. The County will market its debt through the use of competitive bid whenever feasible, cost effective and advantageous to do so.  However, it is recognized that, in some situations, certain debt issues or market conditions dictate marketing the debt via negotiated sale.
  10. The County will not utilize the issuance of Capital Appreciation Bonds in its debt portfolio.
  11. The County will continually monitor its outstanding debt in relation to existing conditions in the debt market and will payoff or refund any outstanding debt when sufficient cost savings can be realized.
  12. Credit enhancements will be used only where the anticipated present value savings of reduced interest expense exceeds the cost of the credit enhancement.
  13. The County will attempt to issue debt that carries a fixed interest rate.  However, certain circumstances may warrant the issuances of variable rate debt.  In those instances, the County should attempt to stabilize the debt service payments through the use of an appropriate stabilization arrangement.
  14. The debt rate will not exceed 50% of the total tax rate.
  15. The County Auditor’s office shall establish a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code.  This process may be outsourced as needed.  Additionally, general financial reporting and certification requirements embodied in bond covenants shall be monitored to ensure compliance with all debt covenants.
  16. The Investment Committee will oversee the investments related to debt management.

 

Policy Review 

This policy should be jointly reviewed by the Commissioners Court and the County Auditor’s Office every three years, notwithstanding the fact that more frequent reviews may be performed as deemed necessary.

 

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Financial Policy

Overview: 
The Williamson County Commissioners’ Court ensures financial stability within the County government by adopting proactive, responsible policies that allow the County to respond to growth and infrastructure needs while maintaining a high standard of County-provided services. This Financial Policy is intended as a guide for the members of Commissioners’ Court in evaluating the impact of policies and funding decisions on future County services. This policy reflects the Court’s commitment to sound financial management principles and the Court’s willingness to make difficult decisions to ensure the County’s long-term operational and financial success.

Goal:
The goal of the County is fiscal responsibility, decisions that consider near and longterm impacts, and sound and prudent financial operations. This is done while focusing on a commitment to honesty, reliability and accountability in all financial decisions.

Strategies:
1. Sustain ample cash balance reserve in order to maintain a favorable County bond rating, lower debt issuance costs and promote a solid fiscal position that can respond well to economic fluctuations.
2. Continue proactive bond market strategies in order to issue voter-approved debt at the lowest possible cost.
3. Manage fiscally responsible, balanced budgets which will help the County continue to provide high quality services while minimizing the financial impact on citizens and preventing higher costs to taxpayers in future years.
4. Manage County growth responsibly while maintaining citizen satisfaction and supporting County government activities.
5. Continue a proactive approach to addressing infrastructure expansion and maintenance by taking advantage of opportunities during periods of growth.
6. Invest in appropriate technology that leverages analysis and reporting capabilities, maximizing investment yields, increasing efficiencies and decreasing personnel costs.
7. Employ effective risk management techniques and respond effectively to changing economic conditions.
8. Assure financial transparency and accountability through regular internal audits and annual, independent audits.
9. Continue to support GFOA standards and achieve excellence in the Comprehensive Annual Financial Report and the Popular Annual Financial Report.

Summary: 
The County has demonstrated consistency in its planning and execution of the above strategies and is poised to handle all economic events. The County has and will continue to follow conservative values and limit exposure to unnecessary risk. The Williamson County Commissioners’ Court recognizes the need to effectively manage short and long-term financial matters. It will continue to act with speed in identifying early opportunities to reprioritize projects and investments and adjust strategies where necessary. The Williamson County Commissioners’ Court recognizes:

o Cash flow is key to strategic flexibility
o Early action is necessary to preserve capital
o A periodic examination and possible restructure of operations will maximize resources
o A focus on core activities is essential
o Regular monitoring of financial and operational key performance measurements enhances efficiency and effectiveness

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Vendor Reimbursement Policy

The purpose of this Williamson County Vendor Reimbursement Policy (“Policy”) is to provide clear guidelines to vendors on Williamson County’s expectations and requirements regarding allowable reimbursable expenditures and required backup. The Policy will also minimize conflicts related to invoice payments and define non-reimbursable items. This Policy is considered a guideline and is not a contract.

This Policy may be altered, deleted or amended, at any time and without prior notice to vendors, by action of the Williamson County Commissioners Court. Unenforceable provisions of this Policy, as imposed by applicable law, regulations, or judicial decisions, shall be deemed to be deleted. Any revisions to this Policy will be distributed to all current vendors doing business with the County.

1. Invoices and Affidavits
1.1 Invoices must adequately describe the goods or services provided to County and include all required backup (i.e. reimbursable expenses, mileage log, timesheets, receipts detailing expenses incurred etc.) that is in a form acceptable to the Williamson County Auditor. Invoices that do not adequately describe the goods or services provided to County or contain backup that is satisfactory to the Williamson County Auditor will be returned to vendor for revisions and the provision above relating to invoice errors resolved in favor of the County shall control as to the required actions of vendor and when such invoice must be paid by the County.

1.2 In the event an invoice includes charges based upon hourly billing rates for services or any other rates based upon the amount of time worked by an individual or individuals in performing services, whether the charges are being billed directly to the County or whether they are the basis of invoices from subcontractors for which the vendor seeks reimbursement from the County, the charges shall be accompanied by an affidavit signed by an officer or principal of the vendor certifying that the work was performed, it was authorized by the County and that all information contained in the invoice that is being submitted is true and correct.

1.3 Upon County’s request, vendor must submit all bills paid affidavits wherein vendor must swear and affirm that vendor has paid each of its subcontractors, laborers, suppliers and material in full for all labor and materials provided to vendor for or in connection with services and work performed for County and, further, vendor must swear and affirm that vendor is not aware of any unpaid bills, claims, demands, or causes of action by any of its subcontractors, laborers, suppliers, or material for or in connection with the furnishing of labor or materials, or both, for services and work performed for County.

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Professional Services Procurement Procedure

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PURPOSE

The Texas “Professional Services Procurement Act” (hereinafter referred to as “The Act”), prohibits awarding contracts for certain professional services on the basis of competitive bidding. Tex. Gov’t Code § 2254.003(a). Instead, The Act mandates a review process to award contracts on the basis of “demonstrated competence and qualifications” to perform the services for the specific project. Id. § 2254.003(a)(1). Services within the scope of The Act include the practice of accounting, architecture, landscape architecture, land surveying, medicine, optometry, professional engineering, real estate appraising or professional nursing. Id. § 2254.002(2)(A)(i)-(ix).

Contracts made in violation of the Professional Services Procurement Act are void as against public policy. Id. § 2254.005.

The Williamson County Auditor’s Office has prepared this Procedure to establish adequate confirmation that the county’s methods are in compliance and claims for services may be appropriately paid with public funds.

The Attorney General has “determin[ed] that the County Auditor has the principal responsibility for enforcing the [Professional Services Procurement Act] against a commissioners court.” Op. Tex. Att’y Gen. JC-0266 (2000) (stating “since it is the County Auditor's duty to withhold approval of a claim ‘unless the claim was incurred as provided by law,’ an auditor may not approve a claim for payment under a contract made in violation of the [Professional Services Procurement Act].” (also citing Tex. Loc. Gov't Code Ann. § 113.065)). Consequently, it is the responsibility of the County Auditor to create and maintain the Williamson County Procedures for Professional Services Procurement and the resulting approval of claims under the Professional Services Procurement Act. The County Auditor’s Office will update this procedure in order to comply with the Texas Constitution and any relevant state statutes, or as deemed necessary.

REVIEW PROCESS FOR “DEMONSTRATED COMPETENCE & QUALIFICATIONS”

A best practice for confirming “demonstrated competence and qualifications” under The Act is for the county Purchasing Agent to issue a Request for Qualifications (RFQ) for each specific project. This practice is mandatory for large capital projects or those projects requiring extraordinary care and expertise (e.g., renovation of a historic building or additions to the jail requiring approval of the Texas Commission on Jail Standards). A large capital project is defined as one with cumulative professional services fees in excess of two million dollars.


Absent an RFQ for a specific project, a prequalified pool of professional firms may be used only if certain guidelines and criteria are met that indicate a reasonable review process will likely yield “demonstrated competence and qualifications” for the specific project. Specifically, the use of a prequalified pool of firms to procure professional services must include, but it not limited to, the following guidelines and criteria:

Generation of Prequalified Pool Must Be Open and Fair for All Interested Firms:

In order to maintain a current prequalified pool, it is necessary that the County allow firms to be added to the pool or amend their information previously submitted on a quarterly basis. The entire list should be regenerated on an interval not to exceed two (2) years. The process must be consistent, open, and fair for all professional firms wishing to participate in the relevant prequalified pool. The regeneration may consist of a letter confirming data previously submitted While membership in the pool is not a guarantee that work will be given, all firms that are members of the pool will be given consistent opportunities to demonstrate their competence and qualifications for appropriate projects.

Prequalified Pool Must Be Approved by Commissioners Court:

Only the Williamson County Commissioners Court acting as a body may approve the use of a prequalified pool under The Act. Such approval must be obtained and recorded in the minutes of the commissioners court for each fiscal year. Use of the pool should be based on a finding that it is in the public’s interest.

Sufficiently Large Committee for Each Project Necessary:

The committee used to administer a prequalified pool must be of no fewer than three (3) members for projects under $1 million and no fewer than five (5) members for projects over $1 million in order to inoculate the county from any allegation that an individual or that a few individuals exercise control over the committee and its selection(s). For road-related projects, appropriate committee members may include the Director of Infrastructure, County Engineer, Road & Bridge Director, and one (1) precinct commissioner whose precinct is most affected by the project or his/her designated employee. For capital projects involving facilities, appropriate committee members may include the Director of Infrastructure, Facilities Director, Department Head of relevant department (e.g., Parks, EMS, SO, etc.), one (1) precinct commissioner whose precinct is most affected by the project or his/her designated employee. A Purchasing Department representative will be a non-voting ex officio member of all committees to ensure procurement policies are followed. In no instance may the committee have more than one (1) member of the commissioners court unless the committee is formally appointed by the full commissioners court and complies with posting agendas under the Open Meetings Act (Tex. Gov’t Code Ch. 551) for drafting of the RFQ and relevant criteria. Additional committee members may include the Budget Office, the Auditor’s Office, or similar county employee(s) with sufficient knowledge and training to serve.


Affected Precinct Commissioner’s Office May Have Only One (1) Member on Project Selection Committee:

A precinct commissioner whose precinct is involved in a selection committee may have only one (1) member from their office on any such project selection committee.

Interviews by Selection Committee:

A presentation and an interview in a question and answer format may also be required for those firm/teams that are ranked the highest. Selected firms will be allowed an equal amount of time for the presentation and posed with equivalent interview questions. The committee will make a recommendation to the Williamson County Commissioners Court. The court will authorize negotiation and award of the contract utilizing Williamson County’s standard terms and conditions of agreement, which the selected firm must execute in order to be awarded the contract.

Committee Evaluations and Scoring Must Be Filed With Purchasing Department:

Documentation of the review process, which consists of evaluations and scoring, must be filed with the Purchasing Department for each project before a recommendation is made to the Williamson County Commissioners Court

Committee Policies:

In addition to the Williamson County Procedures for Professional Services Procurement, the Evaluation Committee Policy must be followed.

Annual Reporting to County Judge:

The Director of Infrastructure and the Purchasing Agent will each update the Williamson County Judge regarding the use of prequalified pools and pending projects and their status on an annual basis.

Implementation of Formal Complaint Process for Firms Passed Up for a Project or Not Included in a Pool:

A representative of the selection committee and a representative of the purchasing department shall be designated to debrief any providers requesting a debriefing following the proposed designation of a pool list or specific contract award. If the issues are not resolved in the debriefing process a formal complaint may be made to the Williamson County Purchasing Agent who will then inform the project selection committee of the pending complaint. Any complaint regarding a contract award or failure to be included in a pool must be handled formally and in writing within five (5) days of the notice of contract being officially awarded by the Williamson County Commissioners Court. Any firm wishing to file a complaint must do so in writing prior to the Williamson County Commissioners Court vote on the award or the pool. If a firm wishes to address the Commissioners Court, it must request to do so in the formal written complaint.

The applicable project selection committee reserves the right to gather further information from any firm so long as consistent opportunity is given to all firms to answer any questions or address concerns. Ultimately, any recommendations from the selection committee are non-binding and are subject to formal approval of the Williamson County Commissioners Court acting as a body. The final decision of the Williamson County Commissioners Court with regard to contract award will be final disposition of any pending complaints.

RESPONSIBILITIES AND EXPECTATIONS

Numerous county representatives or officials may be involved in the procurement of professional services under The Act. Below is a list of customary participants and a description of responsibilities and expectations for each.

County Engineer:

Uses his expertise to make unbiased recommendations to assist the county in determining the appropriate firms with “demonstrated competence and qualifications” matched with specific projects while maintaining a transparent process free of conflicts of interest.

Director of Infrastructure:

Uses his expertise to make unbiased recommendations to assist the county in determining the appropriate firms with “demonstrated competence and qualifications” matched with specific projects while maintaining a transparent process free of conflicts of interest. Ensures filing of necessary documentation with the Purchasing department (such as evaluations and scoring).

Facilities Director or Other Department Head(s):

Uses his expertise to make unbiased recommendations to assist the county in determining the appropriate firms with “demonstrated competence and qualifications” matched with specific projects while maintaining a transparent process free of conflicts of interest.

Auditor’s Office:

Auditor’s Office has the authority to audit any department with regard to procurement under The Act to check compliance with this procedure, and review evaluations and scoring for each project.

Precinct Commissioner:

The commissioner whose precinct is most affected by a project may participate by making recommendation in the public interest; however, commissioners are bound by ethical rules including a prohibition that they not act as a surety or participate in any procurement of a government contract in which he or she may have a substantial interest (ten percent (10%) or $15,000 or more of the fair market value of the business entity) in violation of Tex. Local Gov't Code § 171.001-171.004.

Purchasing Agent:

The Purchasing Agent is a facilitator, ensures compliance and is not a voting member of the selection committee. The Purchasing Agent maintains a list of all project selection committees and ensures compliance with state law and this procedure and makes policy recommendations. The Purchasing Agent determines appropriate Purchasing Department representatives to participate and assist with each project selection committee.

Road & Bridge Director:

Uses his expertise to make unbiased recommendations to assist the county in determining the appropriate firms with “demonstrated competence and qualifications” matched with specific projects while maintaining a transparent process free of conflicts of interest.

ADDITIONAL LEGAL COMPLIANCE REQUIREMENTS

Reasonable Fees

Fees for such services must be lawful, fair and reasonable, and may not exceed the recommended practices and fees published by the applicable professional associations. Tex. Gov’t Code § 2254.003(a)(2), (b)(1)-(2).

Contract Formation Under The Act

Architectural, engineering or land surveying services must be procured by selecting the most highly qualified provider of such services on the basis of demonstrated competence and qualifications, then attempting to negotiate a contract with that provider at a fair and reasonable price. Tex. Gov’t Code § 2254.004(a)(1)-(2). If a contract cannot successfully be negotiated with that provider, the commissioners court must formally end negotiations with that provider, select the next most highly qualified provider and attempt to negotiate a contract in similar fashion. Id. at (b)(1)-(3). This process must continue until a contract is formed. Id. at (c).

Fraud Reporting

Any ethical issues or instances of fraud must be immediately reported. Suspected fraud or unlawful conduct must be reported to the Auditor’s Office as soon as possible for review and further appropriate action.

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Williamson County Courthouse
County Auditor
David U. Flores
710 S. Main Street, Suite 301
Georetown, TX 78626
(512) 943-1500
Driving Directions

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Williamson County Courthouse
710 Main Street Georgetown, TX 78626
Main Telephone: (512)943-1100
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