Debt Affordability Committee Discusses GASB 87 and State Tax-Supported Debt

The Capital Debt Affordability Committee (CDAC) held the second of three annual meetings in the process of recommending a level of capital debt for the State.

During the second CDAC meeting, Christian Lund, Director of Debt Management for the State Treasurer’s Office, took the members through the CDAC Workgroup Report on Implementation of GASB 87. The workgroup looked at the new guidance under GASB 87, which determines which leases should be considered capital leases versus operating leases. The new guidance states that all leases other than short term leases (12 months or less) will be classified in the state’s financial statements as capital leases. This means the number of outstanding capital leases that State has on its book is expected to increase. Lund went through the workgroup’s recommendations for solutions and it was recommended to continue current practices until revisiting the issue next year.

The Committee also heard reports on General Obligation Bonds, Consolidated Transportation Bonds, Maryland Stadium Authority Bonds, Bay Restoration Bonds, GARVEE Bonds, and Capital Leases. There was not much further discussion on these reports.

Lastly, the Committee heard a review of size and condition of debt of higher education institutions from Baltimore City Community College, Morgan State University, University System of Maryland, and St. Mary’s College.

The next CDAC meeting will take place at 9:30 a.m. on Thursday, October 17 to review and discuss the recommendation of general obligation bond authorizations.


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