transparency

Local Government Debt Reporting

Debt Obligation Reporting under Local Government Code, Section 140.008

Overview

The 84th Legislature passed HB 1378 to increase the transparency of local government debt. Under Local Government Code §140.008, political subdivisions, including counties, cities, school districts, junior college districts, special purpose districts, and other subdivisions of state government must annually compile their debt obligation data from the preceding fiscal year and either:

  1. report it to the Comptroller of Public Accounts for posting or, alternatively,
  2. post the information on their own websites.

For those who chose the first option above, the Comptroller's office has developed the Annual Local Debt Report (XLS) form and an online submission form to enable entities or their third-party representatives to compile and submit the required information:

  • Download, complete and save the Annual Local Debt Report form. Save these forms according to the following convention: "Annual Local Debt Report_Name of Political Subdivision_2016".
  • Next, access the online submission form and upload your completed Annual Local Debt Report.

Local Debt Submission Form

Debt Lookup

In accordance with §140.008(d), the Comptroller's office provides the submitted information in an appropriate format. The Local Entity Debt Lookup makes self-reported debt information for each political subdivision available by searching a political subdivision's name, entity type, city, and/or zip code.

Local Entity Debt Lookup

Reporting Deadlines

Political subdivisions shall report the required information via Option 1 or 2 above within 180 days of the end of the most recently completed fiscal year.

Submission Deadlines by Fiscal Year End

Deadlines for Annual Local Debt Reporting (HB 1378)

Note: This table reflects the deadline of 180 days from the last day of an entity's fiscal year.

Last Day of Fiscal Year Submission/Posting Deadline for Fiscal 2017 and Beyond
January 31 July 30
February 28 August 27
March 31 September 27
April 30 October 27
May 31 November 27
June 30 December 27
July 31 January 27
August 31 February 27
September 30 March 29
October 31 April 29
November 30 May 29
December 31 June 29

Required Debt Obligation Reporting

The Comptroller's office was charged with adopting rules for the implementation of Local Government Code §140.008. These rules were drafted, filed, underwent a 30-day comment period and ultimately became effective on January 3, 2018. The rules establish the format, submission and web posting and/or web linking of reporting of political subdivisions' required annual debt information, including that of water districts described in Chapter 49 of the Water Code.

The effective rules can be viewed on the Texas Administrative Code webpage.

Frequently Asked Questions

If our political subdivision has no outstanding debt, do we still need to report under Local Government Code, Section 140.008?

Yes. A political subdivision must annually compile and report the required financial information under Local Government Code, Section 140.008. There is not an exception to the filing requirement for a political subdivision with no outstanding debt.

Our political subdivision has some debt that is not funded by tax money. Are we required to report this?

A political subdivision must annually compile and report the required financial information, including debt obligations defined as an issued public security under Government Code, Section 1201.002.

A public security "means an instrument, including a bond, certificate, note, or other type of obligation authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of this state" under Government Code, Section 1201.002(2)

Since the definition of an issued public security is not limited by the source of debt payment, a political subdivision would be required to report its debt obligation information regardless of the source of payment.

Are county appraisal districts considered political subdivisions and therefore required to report under Local Government Code, Section 140.008?

Yes. Since a county appraisal district is defined as a Texas political subdivision under Section 6.01(c) of the Texas Tax Code, it is required to report under Local Government Code, Section 140.008.

Are charter schools required to report under HB 1378?

Charter schools required under §140.008 to compile and report outstanding debt obligations will likely include those organized under:

  • Texas Education Code Chapter 12, Subchapter B ("Home-Rule School District Charter");
  • Texas Education Code Chapter 12, Subchapter C ("Campus or Campus Program Charter"), and
  • Texas Education Code Chapter 12, Subchapter E ("College or University or Junior College Charter School"); as well as
  • Open-enrollment charter schools operated by certain public institutions of higher education or other governmental entities as described by Texas Education Code Chapter 12, Subchapter D ("Open-Enrollment Charter School"), Section 12.101 ("Authorization").

The Comptroller encourages all charter schools to participate in the Local Government Debt database.

If our political subdivision has short term leases and loans or other agreements not requiring authorization, do we need to report these items under Local Government Code, Section 140.008?

Only public securities defined under Government Code §1201.002 (an instrument, including a bond, certificate, note, or other type of obligation authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of this state) must be reported. If short term leases and loans or other agreements do not meet this definition, they are not required to be reported.

However the intent of HB1378 is debt transparency. Even if they do not meet the definition of public securities above, political subdivisions are encouraged to report bank obligations or direct placements if they have a term over 3 years; were authorized by the voters; or are to be repaid with ad valorem taxation.

If a school district, municipality, or any political subdivision other than a water district makes an annual audit or financial report available on its own website, will this put the entity in compliance with the local debt reporting requirements set forth under Local Government Code §140.008?

No, political subdivisions subject to the reporting requirements of Texas Local Government Code §140.008 (with the exception of water districts subject to §140.008(g)) must compile an Annual Local Debt Report and either make the report available for public inspection and post it continuously on the political subdivision's Internet website in accordance with the requirements of §140.008(f), or provide the pertinent debt information to the Comptroller in the format required by the Comptroller in accordance with the requirements of §140.008 (d) or (e).

However, Texas Local Government Code §140.008(c) does allow an entity that elects to post the Annual Local Debt Report on its own website (in lieu of providing the report to the Comptroller for posting on the Comptroller's website) and that maintains certain financial information described under subsection (b) elsewhere on its website to "provide in the report a direct link to, or a clear statement describing the location of, the separately posted information." The statute explains that an entity is afforded this option in order to avoid "replicating in the annual report" information that is presented in a separate, but clearly identifiable, other location. The Comptroller nonetheless urges political subdivisions and local governments to ensure that all required debt information maintained on the local entity's website can be easily located and accessed by the public, and to use best efforts to promote local debt transparency in accordance with Texas law.

Are Community Centers required to comply with the state's debt reporting requirement?

The Texas Health and Safety Code states that a "community center" may be established and operated by a county, municipality, hospital district, school district, or an organizational combination of two or more of those local agencies. (§534.001)

The Texas Health and Safety Code also provides that a community center is considered:

  • an agency of the state, a governmental unit, and a unit of local government, as defined and specified by Chapters 101 and 102, Civil Practice and Remedies Code;
  • a local government, as defined by Section 791.003, Government Code;
  • a local government for the purposes of Chapter 2259, Government Code; and
  • a political subdivision for the purposes of Chapter 172, Local Government Code.

Also, community centers are established and operated by local agencies under a plan approved by DADS and DSHS (25 TAC §411.301(b)).

Lastly, the Texas Council of Community Centers website states that "Texas Community Centers are units of local government. Locally sponsored by counties, cities, hospital districts and school districts, each Center is governed by a publicly appointed Board of Trustees comprised of local leaders that represent the diversity and best interests of communities, families, and consumers." (Source: http://txcouncil.com/about-community-centers/)

Considering all of this, the Comptroller's Office would state that Community Centers should comply with the debt reporting requirements set forth in Texas Local Government Code §140.008 as that section applies to political subdivisions to include any "subdivision of state government."

Entities should do their own research, however, and/or consult an attorney if they have doubts about the application of §140.008.

As a water district, could I satisfy the debt reporting requirement by completing the Annual Local Debt Report rather than providing a document defined by the Texas Water Code?

Yes, a water district satisfies the debt reporting requirements of Texas Local Government Code §140.008 if it:

  1. completes an audit report, affidavit of financial dormancy, or annual financial report and submits the financial document to the Comptroller in accordance with Texas Local Government Code §140.008(g); or
  2. compiles the financial information by completing the Local Annual Debt Report as described under Texas Local Government Code §140.008(b) and either:
    1. submits the annual report to the Comptroller and provides a link on the water district's website (if the district maintains one) to the location on the Comptroller's website where the water district's financial information may be viewed.
    2. ensures that the annual report is made available for inspection and is posted continuously and clearly on the water district's website together with contact information for the water district's main office.
Can a political subdivision (other than a water district) submit debt information to the Comptroller using a spreadsheet or document formatted differently from the Comptroller's preformatted Local Annual Debt Report?

No. Texas Local Government Code §140.008(d) states a political subdivision may provide to the Comptroller the information described by subsection (b) and any other related information required by the Comptroller in the form and in the manner prescribed by the Comptroller. The Annual Local Debt Report is the Comptroller-approved form and properly incorporates all required information.

If, alternatively, a political subdivision elects to post the required information on its own website rather than submit it to the Comptroller, the political subdivision must do so in the manner prescribed by Local Government Code §140.008 (b), (c), and (f), but otherwise is not required to replicate the Comptroller's preformatted Local Annual Debt Report.

Our water district posts our debt information on our website. Does that meet the requirements of Local Government Code, Section 140.008?

It depends on which report is being posted on the entity’s website. A water district does not satisfy the requirements of Local Government Code (LGC) 140.008 if it prepares the financial documents required under Chapter 49 of the water code and posts them on the district’s website in lieu of submitting them to the Comptroller. Those audit and financial reports required under Chapter 49 must be submitted to the Comptroller (who must then post them on the CPA website) in order for the water district to be in compliance with 140.008.

Alternatively, a water district could elect to prepare the report of debt obligation information described in LGC 140.008(b), and then post that report on its internet website (instead of submitting it to the Comptroller), and doing so would satisfy the requirements of LGC 140.008; however, because compliance with LGC 140.008 does not relieve the district of its obligations under the Water Code, the district would still be required to perform the Chapter 49 audit, deliver that audit to TCEQ, etc. This option would most likely be a more time-consuming, cumbersome alternative.

To put it another way, a water district may prepare two different reports (one that satisfies Texas Water Code Chapter 49 Subchapter G, and one that satisfies LGC 140.008(b)) and post the Local Government Code report to its website instead of delivering to the CPA; or a water district can simply prepare the Chapter 49 report and submit that report directly to the CPA in addition to the other entities who must receive it in accordance with Chapter 49.

Are Economic Development Corporations required to report their debt obligations through Local Government Code, Section 140.008?

EDCs are separate legal entities; however, debt issued by EDCs are considered conduit or component debt of the corresponding local government such as a city or county. While Local Government Code (LGC) 140.008 does not establish a requirement that cities or other jurisdictions report debt issued by their EDCs, we have incorporated the option to report this information on the Annual Local Debt Report form for entities that choose to report their conduit or component debt. We encourage municipalities with component or conduit debt to report this information.

Furthermore, because EDCs are not considered to be political subdivisions under Section 501.055(b) of the Local Government Code they are not required by statue to participate in reporting their debt obligation reporting. This does not prevent an EDC from volunteering their debt obligations and if an EDC obliges to report through the Comptroller’s debt reporting system, there is a framework in place to do such.

Is a Housing Authority, as defined by Local Government Code, Chapter 392, required to comply with Local Government Code, Section 140.008 since the entity is considered a local government for all other purposes but is not described as a “political subdivision”?

Yes. Local Government Code (LGC) 392.006 states that a Housing Authority is “for all purposes… a unit of government”, establishing Housing Authorities as a type of “other subdivision of state government” which is referred to in LGC 140.008(2). Thus, Housing Authorities created by a municipality or county under the authority of LGC 392 are subject to the reporting requirements of LGC 140.008.

If you have further questions or concerns on whether or not this pertains to you, we encourage you to work with your legal counsel to make a determination. If you do not employ your own counsel, please refer to LCG 392.040, which permits Housing Authorities to request legal services from the municipal or county attorney.

If you have any other questions, please contact us or call 844-519-5676.