Governments across Tennessee have four more months to develop or revise their debt management policies to conform with standards issued by the
State Funding Board.
Last year, the Funding Board agreed to require governments that wish to
borrow money to adopt policies no later than Dec. 31, 2011. The
requirement applies not only to city and county governments, but other
public entities that issue debt, including industrial development boards,
utility districts and quasi-governmental agencies.
Comptroller Justin P. Wilson sent letters to local government leaders
reminding them of the deadline.
The standards designed by the Funding Board are intended to give local
governments discretion in crafting their debt management policies,
provided they follow four guiding principles. Those principles are:
1) Debt transactions should be clearly understood by those involved
in making the decisions about them
2) Citizens should be able to get clear explanations about the
transactions
3) Steps should be taken to avoid conflicts of interest among the
parties involved in the transactions
4) Costs and risks association with the transactions should be
clearly disclosed
Many organizations, including the University of Tennessee’s Municipal
Technical Advisory Service (MTAS) and the County Technical Advisory
Service (CTAS), are providing assistance to local governments in
developing or refining their debt management policies. Local governments
may also seek the help of professionals such as financial advisors or bond
lawyers.
