Capital Debt Affordability Committee Treasurer Nancy K. Kopp, Chair

Agenda

October 18, 2021

1:00 PM

1) Treasurer’s Opening Comments

2) Affordability Analysis

Christian Lund, Director of Debt Management, State Treasurer’s Office

3) Committee Discussion and Voting Session on the 2021 Capital Debt

Affordability Committee Recommendations

▪ General Obligation Bond Authorization and Planning Assumptions:

Recommendation of the amount of new State debt that may prudently be

authorized for fiscal year 2023, and planning assumptions for the total amount

of new State debt for future fiscal years.

▪ Academic Facilities Bonds Authorization:

Recommendation of the amount of new bonds for academic facilities for fiscal

year 2023 by the University System of Maryland, Morgan State University,

St. Mary’s College of Maryland and the Baltimore City Community College.

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2021 Affordability Analysis

Capital Debt Affordability Committee

Presented by

Christian Lund, Director of Debt Management

Maryland State Treasurer’s Office

October 18, 2021

CDAC Authorization Scenarios($ in millions)

Scenario 1:

Governor’s Capital

Program

Scenario 2:

Traditional

CDAC*

Scenario 3:

Accelerated Capital

Program

FY Authorization Authorization Authorization

2022 (actual) 1,105 1,105 1,105

2023 1,115 1,470 2,500

2024 1,125 1,515 2,500

2025 1,135 1,560 1,135

2026 1,145 1,605 1,145

2027 1,155 1,655 1,155

2028 1,165 1,705 1,165

2029 1,175 1,755 1,175

2030 1,185 1,810 1,185

2031 1,195 1,865 1,1952

*The Traditional CDAC scenario was developed by calculating what authorizations would be in FY23 if the traditional practice of 3% annual growth had

been maintained. It then continues 3% annual growth into the out years.

Ten-Year Tax-Exempt Bond Rates* and

Ten-Year Breakeven Inflation Rate**

(2003 – Present)

3

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

10 year mmd 10 year breakeven

*Royal Bank of Canada Capital Markets (https://www.rbccm.com/assets/rbccm/docs/muni-finance-

updates/2021_09_30_RBCCMMunicipalMarketsDaily.pdf)

**Federal Reserve Bank of St. Louis (https://fred.stlouisfed.org/series/T10YIE)

Benchmarks:

Governor’s Capital Plan

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All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

1,105 1,115 1,125 1,135 1,145 1,155 1,165 1,175 1,185 1,195

6.98% 7.06%6.87% 6.83%

6.56% 6.57% 6.42% 6.28% 6.11%5.77%

3.31% 3.17% 3.07% 2.92% 2.81% 2.70% 2.52% 2.40% 2.29% 2.19%

-

500

1,000

1,500

2,000

2,500

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

Authorizations

Debt Service as a Percentage of Revenues

Debt Outstanding as a Percentage of Personal Income

Benchmarks:

Traditional CDAC

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1,105 1,470 1,515 1,560 1,605 1,655 1,705 1,755 1,810 1,865

6.98% 7.07% 6.90% 6.89%6.69% 6.80% 6.76% 6.75% 6.70%

6.49%

3.31% 3.19% 3.13% 3.05% 3.00% 2.97% 2.86% 2.81% 2.76% 2.71%

-

500

1,000

1,500

2,000

2,500

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

Authorizations

Debt Service as a Percentage of Revenues

Debt Outstanding as a Percentage of Personal Income

All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

Benchmarks:

Accelerated Capital Plan

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1,105 2,500 2,500 1,135 1,145 1,155 1,165 1,175 1,185 1,195

6.98% 7.08% 6.98% 7.05% 6.95%7.15% 7.13% 7.06% 6.91%

6.56%

3.31% 3.26% 3.33% 3.30% 3.26% 3.18%2.99% 2.82% 2.66% 2.52%

-

500

1,000

1,500

2,000

2,500

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

Authorizations

Debt Service as a Percentage of Revenues

Debt Outstanding as a Percentage of Personal Income

All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

Debt Service Projection:

Governor’s Capital Plan

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$260.0 $318.7 $506.2 $522.9 $492.0 $504.9 $494.6 $484.4 $478.1 $464.1

$1,119.1 $1,107.6

$954.3 $976.0 $1,000.9 $1,029.1 $1,059.3 $1,090.7 $1,123.4 $1,157.0

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

$1,600.0

$1,800.0

$2,000.0

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

General Funds Special and Federal Funds

All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

Debt Service Projection:

Traditional CDAC

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$260.0 $320.1 $514.3 $542.6 $533.8 $578.3 $607.4 $643.0 $688.0 $729.6

$1,119.1 $1,107.6

$954.3 $976.0 $1,000.9 $1,029.1

$1,059.3 $1,090.7

$1,123.4 $1,157.0

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

$1,600.0

$1,800.0

$2,000.0

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

General Funds Special and Federal Funds

All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

Debt Service Projection:

Accelerated Capital Plan

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$260.0 $324.1

$537.6 $591.0 $613.2 $691.6 $729.5 $750.8 $762.9 $755.8

$1,119.1 $1,107.6

$954.3 $976.0 $1,000.9

$1,029.1 $1,059.3 $1,090.7 $1,123.4 $1,157.0

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

$1,600.0

$1,800.0

$2,000.0

FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31

General Funds Special and Federal Funds

All $ millions. Estimates as of 10/15/2021. Tentative and subject to change. Assumptions are conservative, including all 5% coupons, no refundings, and no bond premium after FY23.

Recommendation of Amount of

New General Obligation Bonds

for Fiscal Year 2023

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CDAC General Obligation

Bond Authorization

• CDAC needs to vote on its recommendation for a

General Obligation Bond authorization for FY 2023.

• CDAC only votes on the upcoming fiscal year’s

authorization (FY 2023). Assumed authorizations for FY

2024 – 2027 are for planning purposes only and subject

to change.

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Recommendation of Amount of

New Bonds for Academic

Facilities for Fiscal Year 2023

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Recommendation of Amount of New Bonds for

Academic Facilities for Fiscal Year 2023

Amount of new bonds for academic facilities for fiscal year

2023 requested by institution:

University System of Maryland: $30.0 million

Morgan State University: $0.0

Baltimore City Community College: $0.0

St. Mary’s College of Maryland: $0.0

Total Requested $30.0 million

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