Section 329IAC9-8-15. Local government financial test

   (a) A local government owner or operator may satisfy the requirements of section 4 of this rule by passing the financial test specified in this section. To be eligible to use the financial test, the local government owner or operator shall have the ability and authority to:

(1) assess and levy taxes; or

(2) freely establish fees and charges.

To pass the local government financial test, the owner or operator shall meet the criteria of subsection (b)(2) and (b)(3) based on year end financial statements for the latest completed fiscal year.

  (b) The local government owner or operator shall complete the following:

(1) The local government owner or operator shall have the following information available, as shown in the year end financial statements, for the latest completed fiscal year:

(A) Total revenues that consist of the sum of general fund operating and nonoperating revenues, including the following:

(i) Net local taxes.

(ii) Licenses and permits.

(iii) Fines and forfeitures.

(iv) Revenues from the use of money and property.

(v) Charges for services.

(vi) Investment earnings.

(vii) Sales, that may include any of the following:

(AA) Property.

(BB) Publications.

(viii) Intergovernmental revenues (restricted and unrestricted).

(ix) Total revenues from all other governmental funds, including:

(AA) enterprise;

(BB) debt service;

(CC) capital projects; and

(DD) special revenues;

but excluding revenues to funds held in a trust or agency capacity.

For purposes of this test, the calculation of total revenues must exclude all transfers between funds under the direct control of the local government using the financial test (interfund transfers), liquidation of investments, and issuance of debt.

(B) Total expenditures that consist of the sum of general fund operating and nonoperating expenditures, including the following:

(i) Public safety.

(ii) Public utilities.

(iii) Transportation.

(iv) Public works.

(v) Environmental protection.

(vi) Cultural and recreational.

(vii) Community development.

(viii) Revenue sharing.

(ix) Employee benefits and compensation.

(x) Office management.

(xi) Planning and zoning.

(xii) Capital projects.

(xiii) Interest payments on debt.

(xiv) Payments for retirement of debt principal.

(xv) Total expenditures from all other governmental funds, including the following:

(AA) Enterprise.

(BB) Debt service.

(CC) Capital projects.

(DD) Special revenues.

For purposes of this test, the calculation of total expenditures must exclude all transfers between funds under the direct control of the local government using the financial test (interfund transfers).

(C) Local revenues that consist of total revenues, as defined in clause (A), minus the sum of all transfers from other governmental entities, including all monies received from any of the following:

(i) Federal sources.

(ii) State sources.

(iii) Local government sources.

(D) Debt service that consists of the sum of all interest and principal payments on all long term credit obligations and all interest bearing short term credit obligations, including interest and principal payments on the following:

(i) General obligation bonds.

(ii) Revenue bonds.

(iii) Notes.

(iv) Mortgages.

(v) Judgments.

(vi) Interest bearing warrants.

Debt service excludes payments on noninterest bearing short term obligations, interfund obligations, amounts owed in a trust or agency capacity, and advances and contingent loans from other governments.

(E) Total funds that consist of the sum of cash and investment securities from all funds, including general, enterprise, debt service, capital projects, and special revenue funds, but excluding employee retirement funds, at the end of the local government's financial reporting year. Total funds include the following:

(i) Federal securities.

(ii) Federal agency securities.

(iii) State and local government securities.

(iv) Other securities such as bonds, notes, and mortgages.

For purposes of this test, the calculation of total funds must exclude agency funds, private trust funds, accounts receivable, value of real property, and other nonsecurity assets.

(F) Population that consists of the number of people in the area served by the local government.

(2) The local government's year end financial statements, if independently audited, must not include an adverse auditor's opinion or a disclaimer of opinion. The local government shall not have outstanding issues of general obligation or revenue bonds that are rated as less than investment grade.

(3) The local government owner or operator shall have a letter signed by the chief financial officer worded as specified in subsection (c).

  (c) To demonstrate that it meets the financial test under subsection (b), the chief financial officer of the local government owner or operator shall sign, within one hundred twenty (120) days of the close of each financial reporting year, as defined by the twelve (12) month period for which financial statements used to support the financial test are prepared, a letter worded exactly as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted:

Letter from Chief Financial Officer

I am the chief financial officer of [insert name and address of the owner or operator]. This letter is in support of the use of the local government financial test to demonstrate financial responsibility for [insert "taking corrective action" or "compensating third parties for bodily injury and property damage" or both of those phrases] caused by [insert "sudden accidental releases" or "nonsudden accidental releases" or both of those phrases] in the amount of at least [insert dollar amount] per occurrence and [insert dollar amount] annual aggregate arising from operating (an) underground storage tank(s).

Underground storage tanks at the following facilities are assured by this financial test: [List for each facility the name and address of the facility where tanks assured by this financial test are located. If separate mechanisms or combinations of mechanisms are being used to assure any of the tanks at this facility, list each tank assured by this financial test by the tank identification number provided in the notification submitted pursuant to 329 IAC 9-2-2.]

This owner or operator has not received an adverse opinion or a disclaimer of opinion from an independent auditor on its financial statements for the latest completed fiscal year. Any outstanding issues of general obligation or revenue bonds, if rated, have a Moody's rating of Aaa, Aa, A, or Baa or a Standard & Poor's rating of AAA, AA, A, or BBB; if rated by both firms, the bonds have a Moody's rating of Aaa, Aa, A, or Baa and a Standard & Poor's rating of AAA, AA, A, or BBB.

Worksheet for Municipal Financial Test

Part I: Basic Information

1. Total revenues

a. Revenues (dollars) ______

Value of revenues excludes liquidation of investments and issuance of debt. Value includes all general fund operating and nonoperating revenues, as well as all revenues from all other governmental funds, including enterprise, debt service, capital projects, and special revenues, but excluding revenues to funds held in a trust or agency capacity.

b. Subtract interfund transfers (dollars)______

c. Total revenues (dollars)______

2. Total expenditures

a. Expenditures (dollars) ______

Value consists of the sum of general fund operating and nonoperating expenditures, including interest payments on debt, payments for retirement of debt principal, and total expenditures from all other governmental funds, including enterprise, debt service, capital projects, and special revenues.

b. Subtract interfund transfers (dollars) ______

c. Total expenditures (dollars) ______

3. Local revenues

a. Total revenues (from 1c) (dollars) ______

b. Subtract total intergovernmental transfers (dollars) ______

c. Local revenues (dollars) ______

4. Debt service

a. Interest and fiscal charges (dollars) ______

b. Add debt retirement (dollars) ______

c. Total debt service (dollars) ______

5. Total funds (dollars) ______

(Sum of amounts held as cash and investment securities from all funds, excluding amounts held for employee retirement funds, agency funds, and trust funds.)

6. Population (persons)______

Part II: Application of Test

7. Total revenues to population

a. Total revenues (from 1c)______

b. Population (from 6)______

c. Divide 7a by 7b ______

d. Subtract 417______

e. Divide by 5,212______

f. Multiply by 4.095______

8. Total expenses to population

a. Total expenses (from 2c)______

b. Population (from 6)______

c. Divide 8a by 8b ______

d. Subtract 524 ______

e. Divide by 5,401______

f. Multiply by 4.095______

9. Local revenues to total revenues

a. Local revenues (from 3c)______

b. Total revenues (from 1c)______

c. Divide 9a by 9b ______

d. Subtract .695______

e. Divide by .205______

f. Multiply by 2.840 ______

10. Debt service to population

a. Debt service (from 4c) ______

b. Population (from 6)______

c. Divide 10a by 10b ______

d. Subtract 51 ______

e. Divide by 1,038______

f. Multiply by -1.866______

11. Debt service to total revenues

a. Debt service (from 4c)______

b. Total revenues (from 1c)______

c. Divide 11a by 11b ______

d. Subtract .068 ______

e. Divide by .259 ______

f. Multiply by -3.533 ______

12. Total revenues to total expenses

a. Total revenues (from 1c)______

b. Total expenses (from 2c)______

c. Divide 12a by 12b______

d. Subtract .910 ______

e. Divide by .899 ______

f. Multiply by 3.458 ______

13. Funds balance to total revenues

a. Total funds (from 5) ______

b. Total revenues (from 1c)______

c. Divide 13a by 13b ______

d. Subtract .891 ______

e. Divide by 9.156______

f. Multiply by 3.270 ______

14. Funds balance to total expenses

a. Total funds (from 5)______

b. Total expenses (from 2c)______

c. Divide 14a by 14b______

d. Subtract .866 ______

e. Divide by 6.409 ______

f. Multiply by 3.270 ______

15. Total funds to population

a. Total funds (from 5) ______

b. Population (from 6)______

c. Divide 15a by 15b ______

d. Subtract 270 ______

e. Divide by 4,548 ______

f. Multiply by 1.866 ______

16. Add 7f + 8f + 9f + 10f + 11f + 12f + 13f + 14f + 15f + 4.937 ______

I hereby certify that the financial index shown on line 16 of the worksheet is greater than zero and that the wording of this letter is identical to the wording specified in 329 IAC 9-8-15(c) as such regulations were constituted on the date shown immediately below.

[Date]

[Signature]

[Name]

[Title]

  (d) If a local government owner or operator that uses the test to provide financial assurance finds that it no longer meets the requirements of the financial test based on the year end financial statements, the owner or operator shall obtain alternative coverage within one hundred fifty (150) days of the end of the year for which financial statements have been prepared.

  (e) The commissioner may require reports of financial condition at any time from the local government owner or operator. If the commissioner finds, on the basis of such reports or other information, that the local government owner or operator no longer meets the financial test requirements of subsections (b) and (c), the owner or operator shall obtain alternate coverage within thirty (30) days after notification of such a finding.

  (f) If the local government owner or operator fails to obtain alternate assurance within:

(1) one hundred fifty (150) days of finding that it no longer meets the requirements of the financial test based on the year end financial statements; or

(2) thirty (30) days of notification by the commissioner that it no longer meets the requirements of the financial test;

the owner or operator shall notify the commissioner of such failure within ten (10) days. (Solid Waste Management Division; 329 IAC 9-8-15; filed Jul 19, 1999, 12:00 p.m.: 22 IR 3749; readopted filed Jan 10, 2001, 3:25 p.m.: 24 IR 1535)