City earns AA+ rating for financing

City earns AA+ rating for financing
Posted on 08/30/2019
S&P AA+ Bond Rating · by JAY POWELL

The city recently celebrated another financial win, as it was given one of the highest bond ratings for its strong leadership, budget financing and maintaining an adequate economy.

Columbia was given an AA+ rating for its 2019 general obligation refunding bonds by S&P Global Ratings. The S&P report states that Columbia’s economic stability can be tied to its continued commercial and residential economic growth related to the region-wide growth surrounding Nashville and Southern Middle Tennessee.

“Financially, Columbia maintains a very strong fund balance; it expects to continue maintaining reserves we consider in excess of 75 percent of operating expenditures during the two-year outlook period,” the report states. “With good management practices and policies and no additional debt plans, we expect the city’s credit profile to remain very stable during the outlook period.”

The AA+ rating was attributed to several factors, specifically having an adequate economy, strong management and leadership, the ability to maintain a strong budget and the ability to handle city debt liabilities. It was also in part due to the city’s refund of an old 2010 bond.

Columbia Assistant City Manager Thad Jablonski, who also serves as the city’s finance director and city recorder, said this is good news “all around” for Columbia. By retiring the 2010 bond, it was estimated to have saved the city close to $500,000. He also said that the AA+ rating is not only due to good financial planning on the city’s behalf, but also the increase in Columbia and Maury County residents, increased property values and creating more better paying jobs.

“We are literally doing every single thing, checking every single box, and taking every single action we can for the municipal government to get the most points, per their rating system,” Jablonski said. “What we are seeing is population is increasing, household income is increasing, median household value is increasing. Those numbers, and the growth and prosperity, is taking care of that area and the demographic that, really, is out of our control.”

According to the report, the city’s management’s strengths are in its maintaining a five-year capital improvement plan (CIP), as well as a comprehensive debt-management policy and its formally adopted reserve policy, which keeps 25 percent of annual operating expenditures, in general fund reserves to address uneven cash flow and provide liquidity for contingent liabilities or tax-revenue shortfalls.

Columbia’s budget performance, in particular was very strong, according to the report. In 2018, the city had an operating surplus of 7.6 percent expenditures, or $2.3 million, in the general fund, and 10.8 percent across all government funds. In other words, the city stayed well within its budget, with money left in reserves to balance the 2019 budget.

Jablonski said the AA+ rating is also a reminder of the good leadership within city staff when it comes to handling Columbia’s finances, and that part of that leadership is having a long-term plan to predict what could happen in the future financially.

“We did revenue expenditure forecasting, excess forecasting about what we’re going to have when revenues come in over expenditure in the next five years,” he said. “It’s all very concise, according to S&P, the city is being very proactive, and its tying in its budget not as a one-year business plan, but overall as a longer business planning document.”

Columbia was also recently awarded its 20th consecutive Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). This is the highest form of recognition in the area of governmental accounting and financial reporting, and is considered a significant accomplishment by a government and its management.

The city also received its first GFOA Award for Outstanding Achievement in Popular Annual Financial Reporting (PAFR). · by JAY POWELL