Number: ADMIN 120
Effective: September 2, 2016
Department: Finance and Business
Last Revision: September 11, 2018


This policy establishes a framework for the use of debt instruments to finance capital and infrastructure initiatives at the College of Western Idaho (“CWI” or “College”), states the principles and processes that will be utilized, and
assigns responsibilities for the approval, implementation, management, and oversight of the College’s debt portfolio. The policy formalizes the link between CWI’s strategic plan and its mission statement, in order to achieve the College’s financial objectives and maximize support of the College and its ongoing continuity of operations and viability.


This policy applies to all units within CWI for which CWI is financially and legally accountable, with the exclusion of specific operational debt or lease transactions delegated by the Board of Trustees (“the Board”) to the Vice President of Finance & Administration (“VPFA”). Debt may be incurred on behalf of the College only by persons and governing bodies authorized in this policy and through processes that comply with this policy.


Arbitrage Certificate: a document executed by the issuer of tax‐exempt or other federally tax‐advantaged bonds at the time of initial issuance certifying as to various matters relating to compliance with federal income tax laws and regulations, including arbitrage rules.  May be used interchangeably with the term “tax certificate”.

Bond: an interest‐bearing promise to pay with a specific maturity.

Bond counsel: a lawyer who writes an opinion on the bond or note as to its tax‐exempt status and the validity of its issuance.

Certificates of Participation:  a funding instrument evidencing a pro rata share in a specific pledged revenue stream, usually lease payments by the issuer that are typically subject to annual appropriation.

Competitive sale: a method of sale where underwriters simultaneously submit proposals, usually through an opaque electronic platform,  for the purchase of the issuer’s  securities and the securities are awarded to the underwriter or underwriting syndicate presenting the best bid according to stipulated criteria set forth in the notice of sale, typically the lowest true interest cost.. The underwriting of securities in this manner is also referred to as a “public sale” or “competitive bid.”

Costs of issuance: the expenses associated with the sale of a new issue of municipal securities including fees charged by rating agencies, bond counsel, underwriter counsel, auditors (to obtain consent to use auditor’s opinion on financial statements), and printing fees. In addition, the underwriter’s discount is considered one of the costs of issuance. This fee is deducted from the amount of proceeds received at closing. The Internal Revenue Code limits the amount of bond proceeds to pay costs of issuance for certain types of tax‐exempt bonds, such as private activity bonds, although generally CWI would not be issuing private activity bonds and thus not subject to this limitation. Costs of issuance are amortized over the life of the bonds.

Credit ratings: various alphabetical and numerical designations used by institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness. Standard & Poor's and Fitch Investors Service Inc. use the same system, starting with their highest rating of AAA, AA, A, BBB, BB, B, CCC, CC, C, and D for default. Moody's Investors Services uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca,C, and D. Each of the services use + or ‐ or +1 to indicate half steps in between. The top four grades are considered Investment Grade Ratings.

Municipal Advisor or Financial Advisor: a person or firm engaged by CWI to advise CWI on the planning and structuring of debt transactions under a standard of care of owing CWI a fiduciary duty.

Negotiated sale: the sale of a new issue of municipal securities by an issuer directly to an underwriter or underwriting syndicate selected by the issuer. A negotiated sale is distinguished from a sale by competitive bid, which requires public bidding by the underwriters. Among the primary points of negotiation for an issuer are the interest rate, call features, and the compensation to be paid to the underwriter, usually expressed as a discount from the purchase price of the issue. The sale of a new issue of securities in this manner is also known as a negotiated underwriting.

Official Statement (OS) or Offering Circular (OC): an official document (prospectus) circulated for an issuer prior to a bond sale that gives in detail the security and financial information relating to the issue. There are usually two OSs, the first commonly referred to as the preliminary OS, which should be available to the investor before the sale. The final OS must be sent to the purchaser before delivery of the bonds.

Underwriter: a person or firm engaged by CWI to underwrite debt transactions, and to engage in certain permitted activities to assist in the structuring of the debt, with the recognition that the underwriter does not owe a fiduciary duty to CWI.


In order to fulfill its mission, CWI will need to make strategic capital investments in its facilities. Various available funding resources, including state appropriations and other public funds, internal reserves, philanthropic donations, and debt proceeds will be utilized by the College’s senior management and the Board judiciously to achieve CWI’s strategic objectives. The framework outlined in this policy will govern CWI’s debt management processes, including the capital funding structure, criteria used to evaluate the appropriate mix of funding sources, appropriate use of leverage, the matching of the term of its liabilities to the useful life of financed assets, and the maintenance of an investment grade credit rating. The following principles will be applied to the College’s debt issuance practices.

I. Governing Principles

  1. Debt issuance processes will comply with applicable laws, regulations, bond covenants, and external reporting requirements as well as CWI policy and procedures. 
  2. Approval by the Board will be secured for all new borrowing and refinancing initiatives as required by policy and procedures in place at the time of debt issuance. Debt will be utilized to fund only capital initiatives that are consistent with the College’s mission, strategic priorities, and capital plan.
  3. CWI will establish and maintain an internal monitoring plan to ensure compliance with this policy, bond resolutions, and post-issuance compliance requirements.
  4. CWI’s overall debt status and projected outlook will be reported to the Board of Trustees by the VPFA, at least annually.
  5. The debt type and terms will be determined on the basis of expected availability of resources, other long term goals and obligations of the borrowing unit and the College, the useful life of the assets being financed, and market conditions at the time of financing. 
  6. The policy, metrics, and monitoring mechanisms utilized will be reviewed annually, and will be updated as needed to align with CWI’s objectives and strategy, and also with evolving financial, economic, legal, and other factors. 

II. Financing Objectives

The financing objectives stated below, combined with the judgment of CWI leadership, will provide a framework for decisions regarding the use and management of debt financing at the College.

  1. Debt capacity will be optimally utilized to align capital investments and initiatives with strategic objectives through the long range planning process.
  2. The College will strive to maintain favorable access to financial markets by managing the timing and overall level of debt to ensure low‐cost and timely access to the capital markets.
  3. The overall debt portfolio will be optimized to limit and balance risk in order to achieve the lowest cost of capital while limiting exposure to interest rate risk and other financing and credit risks.
  4. CWI will ensure the full and timely payment of principal and interest payments on all outstanding debt.
  5. The College’s credit rating will be managed to maintain the highest possible creditworthiness based on the strategic needs of the College and to facilitate the issuance of debt at favorable cost. Outstanding debt will be limited to a level that will maintain acceptable credit ratings from the credit rating agencies, based on industry standards and peer comparisons. While maintaining or attaining a specific credit rating is not an objective of this Policy, CWI’s Finance Committee (the “Finance Committee”) will monitor CWI’s credit ratings and assess factors that might impact those ratings.
  6. When formulating proposals for general obligation bonds, CWI will seek to balance achievement of the College’s strategic goals with responsibilities to the taxpayers to maintain an acceptable tax burden.

III. Capital Investment Planning and Funding Prioritization

The College will implement a capital planning process in which capital investments are vetted for debt financing or refinancing based on their economics, strategic importance and other relevant factors. The capital plan will be reviewed and approved by the Board periodically.

IV. Debt Management Strategies

To achieve the financing objectives stated above, CWI has adopted the following debt management strategies and procedures. The strategies set forth below will be reviewed and modified by CWI over time.

A. Strategies

  1. Debt financing will be limited to prioritized projects considered critical to the mission of CWI. 
  2. Projects that are self‐funding or can create budgetary savings will receive priority consideration. The Board will prioritize all projects put forward for funding.
  3. State funding, cash reserves, philanthropy and all other sources of legally available funds are expected to finance a portion of the cost for CWI’s investment in facilities.
  4. Careful consideration of all potential funding sources will be evaluated by senior leadership and the Board within the context of this policy and the overall portfolio to ensure that the funding method, financial product and structure selected is appropriate, advantageous to the College, and consistent with the College’s strategic objectives. 
  5. Efforts will be made to utilize tax‐exempt debt whenever feasible, and CWI’s debt portfolio will be managed to minimize the amount of taxable debt outstanding.
  6. No new funding methods will be implemented without the adoption of corresponding policy, procedures, and a corresponding oversight and compliance monitoring plan.
  7. CWI may engage professional service providers as needed to facilitate debt processes and post-issuance compliance.

B. Sources of Funds

Idaho Code authorizes several alternative funding methods for community colleges, including levies, facilities reserve funding, and general obligation bonds.  Each funding method and structure carries specific benefits, risks, restrictions, and costs.  Due-diligence review will be performed in advance of each transaction, and may include an assessment of the following:

  • Identification and quantification of potential risks and benefits
  • Analysis of the impact of funding method selection on the College’s long-term creditworthiness, debt capacity and debt affordability
  • Budgetary impacts
  • Political, economic, market, and other relevant factors    

CWI will comply with the legal debt capacity, usage restrictions, approval and election requirements specified in Idaho Code and the Idaho Constitution for the funding method selected for each project, including original and refunding transactions.  Below is a description of primary allowable funding methods (not including CWI operating revenues and State appropriations) and applicable constraints:

Funding Source / Description

Idaho Code Reference


Approval Required



Maintenance and Operation Levy (“M&O Levy”)


Provides for the maintenance and operation of the college through the assessment and collection of property taxes


Board of Trustees approval only

(no voter requirement)


  • The M&O Levy may not exceed 0.125% of the market value for assessment purposes on all taxable property within the CWI district.  However, CWI’s M&O levy is dramatically less than the maximum rate and state budget laws permit only small percentage increases in M&O funds from year to year.

Supplemental M&O Levy


Voter approval

required: Simple Majority


  • The Supplemental M&O Levy may be authorized for up to 2 years through an election approved by a simple majority of the CWI district electors voting in such an election.

Plant Facilities Levy


Provides for acquisition, purchase or improvement of a school site(s) and other purposes as listed in IC §33-1102




Voter approval required:

55% - Less than .2%

60% - .2 to .3%

66% - .3% or more


Approval % based on the $ amount of the levy (as a ratio of the tax base). 



  • The annual dollar amount of the levy is limited to an amount that does not exceed 0.4% of market value for assessment purposes of the CWI district as of December 31 of the year immediately prior to the year of election.
  • Limited to 10 years without further vote.
  • May be used for lease purchase agreements provided such agreements shall not extend beyond the period of the plant facilities levy.
  • As a practical matter, CWI will be at the 55% voter approval level because of the large combined Ada/Canyon taxable value.

Gym and Grounds Levy


Provides for the maintenance and care of the gymnasium and CWI grounds


Board of Trustees approval only

(no voter requirement)


  • Tax levy not to exceed .01% on each dollar of the value of taxable property within the CWI district.
  • In addition to other taxes authorized by law.

General Obligation Bond Levy


Provides for an ad valorem property tax for the purposes of repaying voter approved debt for specific capital projects




Voter approval required: 2/3 Supermajority


  • Total outstanding bond debt cannot  exceed 1% of the market value for assessment purposes of the taxable property in the CWI


  • Maturity may not to exceed 30 years


  • May not be sold for less than its aggregate par value


C. Debt Instrument Types

CWI has various financing options available to it:  general obligation bonds, Certificates of Participation, and revenue bonds; each with distinct benefits and disadvantages. A brief description of each of these financing instruments follows:

  1. General Obligation Bonds:   CWI may issue long-term general obligation bonds, subject to voter approval and debt limitations.  General Obligation Bonds are paid from a dedicated tax levy.
  2. Certificates of Participation (COP’s):  CWI may utilize Certificates of Participation to obtain financing on an annual appropriation basis.  Under this structure, CWI enters into an annual appropriation lease and makes payments on the lease from its lawful funds, which include plant facility levy revenues.  So long as each lease term does not exceed one year in length and CWI is free to walk away at the end of each lease term without penalty or continuing liability, no voter or court approval is required.
  3. Revenue Bonds:  CWI, utilizing a dormitory housing authority, may issue bonds repaid from student fees and operating revenues for housing and student union facilities.  No voter authorization is required. 

D. Tax Exemption Strategies

Tax-Exempt Instruments:  Tax-exempt borrowings (whether general obligation bonds, revenue bonds or COP’s)  can be exempt from federal and Idaho income taxation, and may be considered advantageous for some projects due to lower borrowing costs and favorable terms.  They are complex and carry specific restrictions and compliance monitoring.  The College will maintain and document qualifying tax exempt status over the life of the financing and tracking of private usage, and will comply with applicable arbitrage rules and reporting requirements.   

Taxable Bonds:   A taxable bond is a debt security whose return to the investor is subject to income taxes at the local, state, and federal level, and carries fewer restrictions than tax-exempt debt.  This type of funding may be considered by the College to be appropriate for certain initiatives, or to fund projects that, though strategically important, are ineligible for tax‐exempt financing.

V. Debt Management Practices

A. Debt Administration  

  1. CWI’s VPFA or his/her designees are responsible for structuring new CWI transactions, managing project funds, and developing repayment schedules from units.
  2. Designated staff in the Business Office will monitor and manage the College’s debt portfolio, and maintain complete records.
  3. CWI’s Finance Committee will review debt management practices and new transactions on at least on a quarterly basis, and will provide guidance and recommendations to the VPFA and the Board.
  4. In situations where debt is issued for projects benefitting multiple units, the Business Office may opt to pool the debt and allocate funds and financing costs for the various projects to the applicable budget units.
  5. The Board of Trustees, as needed, will review proposals for new projects and prioritize them according to CWI objectives and strategies.
  6. The Finance Committee will review, at least annually, CWI’s debt capacity, repayment sources and other capital market, budget and financing considerations.

B. Structure

  1. To obtain the lowest possible financing costs, debt will be structured with the strongest possible authorized security.
  2. Debt maturity structures will not exceed the useful life of the facilities financed.
  3. Debt service should not exceed the expected revenues used to repay the debt at any time.
  4. Call features should be structured to provide maximum flexibility relative to cost.

C. Methods of Sale

CWI will consider Negotiated Sale or Competitive Sale on a case‐by‐case basis in consultation with its Municipal Advisor.

D. Selection of Service Providers

The VPFA or his/her designee shall be responsible for establishing a selection process for securing qualified professional services related to the issuance or management of debt or post-issuance compliance, which may include bond counsel, financial advisors, underwriters, trustees, or other services.

  1. A request for proposal (RFP) process may be utilized as required, or at the discretion of the VPFA, to select professional service providers.
  2. Contracts for professional services may be issued as needed on a per-project basis or for a specified time period, at the discretion of the VPFA.

E. Refunding Guidelines 

  1. Outstanding debt will be monitored for refunding opportunities.
  2. As a guideline, refunding debt opportunities will be considered if they result in a savings the present value of which is equal to or greater than 5% of the principal amount of bonds being refinanced.
  3. Refunding outstanding debt may also be considered if the College benefits from eliminated restrictive covenants, payment obligations, reserve and/or security requirements or other obligations, or from consolidation into larger, more cost effective transactions.

F. Key Financial Metrics

Consistent with best practices and college accountability to its governing board, key financial ratios and other metrics will be monitored and reported annually and on a pro forma basis when new debt is issued.  See Attachment A for a list of the ratios/financial metrics required by this policy.

Additional metrics may be tracked for monitoring purposes, at the discretion of the VPFA or to comply with specific debt transaction covenants.  Financial metric requirements will be reviewed annually and may be amended at the discretion of the Board, based on risk tolerance and strategic objectives.  Target ratios or policy limits may be established as part of this policy.

G. Monitoring and Reporting

  1. The VPFA will be responsible for ensuring that pre‐issuance and post‐issuance compliance processes are in place for all debt taken on by the College, and for oversight of these processes. 
  2. Monitoring, reporting, disclosure, and documentation practices will comply with CWI Policy Number ADMIN‐030 Post‐Issuance Tax Exempt Bond Compliance Policy, industry best practices, and also with any covenants and requirements specific to individual financing transactions.
  3. For each new debt transaction, a monitoring plan will be implemented to ensure compliance with all requirements specified.
  4. The VPFA will present an annual report to the Board of Trustees at the time of the first budget reading, or prior to June 1.  Reporting will include, at a minimum:
    1. Status report of outstanding and newly issued debt
    2. Annual appropriation leases (outstanding and newly issued)
    3. Required key financial metrics
    4. Estimated CWI general obligation bond capacity
    5. Current credit ratings
    6. A description by the  VPFA  of the outcomes of both appropriation and non-appropriation of CWI’s existing leases, as defined by the applicable lease agreements and indentures.
    7. Optionally, at the VPFA’s request,  professional opinions of CWI’s bond counsel and municipal advisor regarding the outcomes of both appropriation and non-appropriation.

VI. Arbitrage and Investment of Bond Proceeds; Tax Compliance

Compliance with arbitrage requirements on investment of tax‐exempt bond funds will be maintained and documented.  CWI will also maintain policies to monitor other covenants relating to maintaining tax exemptions such as use of facilities by non‐governmental persons.

VII. Disclosure

Initial and ongoing disclosure requirements will be satisfied in accordance with SEC Rules and Idaho Statutes or Rules, as applicable. Financial reports, statistical data, and descriptions of any material events will be submitted as required under outstanding bond indentures and disclosure agreements required by SEC Rules.


  • CWI Policy ADMIN 030 – Post-Issuance Tax Exempt Bond Compliance Policy
  • Idaho Code:
    • Title 33, Chapters 3, 6, 8, 9 and 11
  • Title 33, Chapter 21 Junior Colleges
  • Internal Revenue Service Code, Section 103, Sections 141-150
  • Municipal Securities Rulemaking Board,
  • US Securities and Exchange Commission,


Ratios/Financial Metrics to be Reported Annually to the CWI Board of Trustees





Actual Debt Service Coverage


Sum of:  Operating surplus (deficit), plus depreciation expense, plus interest expense; divided by total principal & interest expense


Aggregate Annual Appropriation Lease Payments to ABT Capacity


Maximum aggregate annual appropriation lease payments divided by the sum of:

75% of the 3-year average net revenues available for lease payments, plus total annual plant facilities levies.

Net revenues available for lease payments is defined as income before capital gifts, plus depreciation, less total annual plant facilities levies.

Less than 100%

Annual Appropriation Lease Payment Coverage (with no plant levy support)


Net revenues available for lease payments (defined as income before capital gifts, plus depreciation, less total annual plant facilities levies)

Divided by maximum aggregate annual appropriation lease payments (not supported by plant levy)

Greater than 1.33X

Annual Appropriation Lease Payment Coverage (with plant levy support)


Total annual plant facilities levies divided by maximum aggregate annual appropriation lease payments (supported by a plant levy)

Greater than 1.00 X

Financial Leverage (expendable financial resources to direct debt)


Sum of:  unrestricted net assets, plus restricted expendable net assets, plus foundation unrestricted/temporarily restricted net assets, less foundation net investment in plant; divided by outstanding direct debt


Operating Margin


Operating surplus (deficit) divided by total operating revenue


Operating Reserve (expendable financial resources to operations)


Spendable Cash & Investments to Operating Expenses.

Sum of:  unrestricted net assets, plus restricted expendable net assets, plus foundation unrestricted/temporarily restricted net assets, less foundation net investment in plant; divided by total operating expense



Additional Ratios/Financial Metrics (Optional; to be Tracked at VPFA Discretion)





Debt Capacity (Legal General Obligation)


Debt as a % of taxable assessed property values

May not

Exceed 1% per

Idaho Code

Debt Service Coverage-3-Year Average


Sum of:  Operating surplus/(deficit), plus depreciation expense, plus interest expense; divided by total principal & interest expense; 3-year average


Government Appropriations per Student


Government operating appropriations divided by total student enrollment (FTE)


Monthly Days Cash on Hand


Monthly liquidity times 365; divided by total expense, less large non-cash expenses, less depreciation expense


Monthly Liquidity


Monthly operating liquidity, plus the smallest figure of monthly endowment liquidity, unrestricted board designated endowment, unrestricted working capital commingled with the operating endowment


Monthly Liquidity to Demand Debt


Monthly liquidity divided by total demand debt


Net Tuition per Student


Total net tuition and fees divided by total student enrollment (FTE)


Operating Cash Flow Margin


Operating cash flow divided by total operating revenue


Reputation and Pricing Power


Annual % change in operating revenue


Revenue Diversity


Maximum single contribution


Sources of Revenue


Allocation by each revenue stream:

Tuition and Auxiliaries, Investment Income, Gifts, Grants and Contracts, Government Appropriations, Tax Revenue, Patient Care, Other


Total Tuition Discount


Scholarship aid plus scholarship expense; divided by total net tuition and fees plus scholarship aid plus scholarship expense