2015 Annual Report
        Clean Water State Revolving Fund Programs

Dear Colleagues,

It is my pleasure to provide the Clean Water State Revolving Fund's (CWSRF) Annual Report for 2015. The
51 state-managed CWSRF programs had a banner year, providing over $5.8 billion in assistance to mu-
nicipalities and other recipients.

Over the past 28 years, the CWSRF has collectively delivered over $111 billion to much-needed water
quality and public health projects. Funds come from federal and state contributions, interest earnings
from loans as they revolve, investment earnings, and proceeds from the sale of bond issues. The environ-
mental, economic and societal benefits derived from this important investment in water infrastructure are

This report includes financial results and performance highlights that show the cumulative progress of
the CWSRF program as of 2015. There is a section on program eligibilities, which were expanded by the
Water Resources Reform and Development Act of 2014. The report spotlights some of our most compel-
ling recent projects and provides a list of agencies  that manage the state CWSRF programs.

Looking to 2016 and beyond, the CWSRF continues to be a critical and foundational financial resource
for states, local governments, and other partners. As the program has grown, new opportunities have aris-
en to expand our assistance to a wide range of eligibilities and a diverse set of public and private sector
recipients. The implementation of a broadly based  marketing program in 2016 will help lay the founda-
tion of the program's future.

Lastly, I want to underscore that none of the impressive progress reported herein would have been possi-
ble without the dedication and hard work of the state and federal employees in the CWSRF program.

Andrew Sawyers, Ph.D., Director
EPA Office of Wastewater Management
                                            Clean Water
                                            State Revolving Fund

2015 Performance Highlights
2015 Financial Overview
WRRDA Expands CWSRF Project Eligibilities
CWSRF Success Stories
State Agencies That Manage CWSRF Programs
                            2015 Annual Report | 1

             CWSRF Performance Highlights

Since its inception under the 1987 amendments to the Clean Water Act (CWA), the CWSRF has
established itself as the largest public source of water-quality financing in the country. The continued
growth and success of the 51 CWSRF programs operating in all 50 United States and Puerto Rico is a
vital component of addressing our nation's infrastructure challenges. The flexible financing terms and
beneficial subsidies offered by these state programs allow thousands of communities and other entities
to upgrade and replace their wastewater treatment and sewer infrastructure, protect waterbodies from
nonpoint sources of pollution, and achieve a wide variety of other environmental benefits—all at a much
lower cost to the public.
             Figure 1:  CWSRF Cumulative Assistance Exceeds $111 Billion
   =  $60
          2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
    36,159 Cumulative Assistance Agreements
                            Cumulative Assistance
During FY 2015, the CWSRF provided $5.8 billion in assistance to eligible projects. Over its lifetime, the
program has provided $111 billion through over 36,000 assistance agreements. Cumulative assistance
will continue to grow with Congressional appropriations, state matching funds (states match 20 percent
of federal contributions), interest earnings, and loan repayments. In addition, states with high demand for
CWSRF funds will continue to increase funding capacity by issuing revenue or general-obligation bonds.
                                2015 Annual Report | 2

                       Figure 2:  CWSRFs Fund a Wide Range of Projects
Nonpoint & Estuary 4%
                   Treatment Works
 Total: $111.2 Billion
 NPS &  Estuary: $4.6 Billion
$106.6 Billion
Secondary Treatment ($39.4 Billion)
Advanced Treatment ($21.4 Billion)
New Sewers ($17.1 Billion)
Sanitary Sewer Overflow (SSO) Correction ($15.3 Billion)
Combined Sewer Overflow (CSO) Correction ($11.6 Billion)
Stormwater ($1.0 Billion)
Recycled Water ($0.8 Billion)
CWSRF programs rank applications for funding according to public health and compliance criteria. These
ranking systems help ensure that CWSRF funding goes first and foremost to projects with the greatest
impact on public health and the environment. The ranking systems also allow for a great degree of flexi-
bility. States fund projects based on their own unique water quality priorities. As of June 30, 2015,
CWSRF programs cumulatively provided $106.6 billion in financing for a variety of publicly owned treat-
ments works projects ranging from secondary and advanced  treatment technologies to water recycling. In
addition, $4.6 billion went towards a wide variety of projects that address nonpoint source pollution estu-
ary protection.
                                        2015 Annual Report | 3

                 Figure 3:  CWSRF Programs Serve Communities of All Sizes
                                                                          Population Served:
                                                                             100.000 & Above


                                                                            • 3.500 - 9,999

                                                                            • Under 3,500
                   Assistance Provided-
Number of Assistance Agreements (36,159)
The CWSRF programs serve communities of all sizes. CWSRF programs provide affordable financing to
small, medium, and large communities across the country. In FY 2015, 64 percent of all CWSRF assis-
tance agreements, totaling approximately $1.2 billion, went to projects serving communities of less than
10,000 people. 14 percent, totaling $2.5 billion dollars went to project serving communities of 100,000
or more.

Since 1988, these borrowers have benefitted from billions of dollars in interest savings. According to a
popular municipal borrowing index, the average municipal borrowing rate was 3.8 percent in FY 2015. By
comparison, the average CWSRF interest rate was 1.7 percent. The CWSRF remains one of the most af-
fordable sources of public water quality financing in the country. For example, a community would save
18 percent by financing its project with a 20-year loan at 1.7 percent from the CWSRF instead of using
commercial financing at 3.8 percent.
                                      2015 Annual Report |  4

                    2015 Financial Overview

The Clean Water Act requires an annual financial audit of the 51 state-level CWSRF programs. Each state
and Puerto Rico conducts these audits according to the generally accepted accounting standards
established by the Governmental Accounting Standards Board (GASB). States often define their CWRSF
programs as ongoing enterprise funds under the GASB definitions of funds. The standardized financial
statements used for CWSRF programs include a statements of fund activity, revenues, expenses,
earnings, and assets. Because the 51 constituent CWSRF programs are independent state-level entities,
no nationally audited CWSRF program financial reports are available. However, national aggregate
financial statements have been developed using data entered in EPA's National Information
Management System between July 1, 2014 and June 30, 2015. The statements are best viewed as non-
audited, cash flow-based financial reports.

Statement of Fund Activity

This statement provides an overview of major indicators of fund activity, including capitalization grant
levels, project commitments, project disbursements, and  subsidies provided. Both annual and cumulative
data are given.

Statement of Revenues, Expenses, and Earnings

This statement describes the overall performance of the CWSRF fund over the reporting period that is
reflected in the increase or decrease in Net Assets.

Statement of Cash Flows

This statement provides a detailed accounting of the actual flow of cash into and out of the CWSRF fund.

Statement of Net Assets

This statement describes CWSRF assets  and liabilities through the end of the fiscal year. Assets include
financial assets and capital assets.  Liabilities include both current and long term liabilities. CWSRF assets
include grant funds that have been  drawn from the federal treasury to date, but do not include total grant
awards. CWSRF assets also include state matching contributions  that have been deposited in the fund.
Financial Highlights
   Total assets increased by $2.0 billion, a 4.6 percent increase from 2014

   CWSRF program equity (net assets) totals $46.3 billion, a 4.6 percent increase from 2014
   Total operating revenues exceeded expenses by $143 million, with interest earnings from loans and
   investments totaling approximately $1.3 billion

   Loan principal repayments to the CWSRF were $3.9 billion

   Loan disbursements increased by $440  million in  FY2015 compared to the previous year.

                                    2015 Annual Report | 5

Statement of Fund Activity (Millions of Dollars)
Statement of Fund Activity
Annual Fund Activity
Federal Capitalization Grants
State Matching Funds
New Funds Available for Assistance
Project Commitments (Executed Loan Agreements)
Project Disbursements
Cash Draws from Federal Capitalization Grants
Total Annual Subsidy*
Negative Interest
Principal Forgiveness
Cumulative Fund Activity
Federal Capitalization Grants
State Matching Funds
Funds Available for Assistance
Project Commitments (Executed Loan Agreements)
Project Disbursements
Cash Draws from Federal Capitalization Grants
Total Cumulative Subsidy*
Negative Interest
Principal Forgiveness




In 2015, CWSRF programs had $5.8 billion in executed loan agreements, an increase of $290 million from the
previous year. Cumulative executed loan agreements top $111 billion since the beginning of the program in
1987, with more than $27 billion in agreements in the last five years. CWSRF programs remain enormously
successful, providing $2.82 in loan funding for every $1 in federal capitalization awarded.
Cumulative Executed Loan Agreements as a percent of Funds Available for Assistance ("pace") was 98 per-
cent in FY2015, which shows that states have remained very successful in directing funds toward projects
that address important water quality problems. This strong rate of fund utilization demonstrates a high de-
mand for CWSRF financing and is a direct result of the program's below market interest rates and flexible fi-
nancing options, targeted marketing and outreach initiatives, and effective program management.
                                       2015 Annual Report |  6

Statement of Revenues, Expenses and Earnings (Millions of Dollars)
Statement of Revenues, Expenses and Earnings
Operating Revenues                                                  FY2014       FY2015
Interest on Investments                                               253.6         270.9
Interest on Loans                                                     1,039.1       997.0
Total Operating Revenues                                              1,292.7       1,267.9
Operating Expenses
Bond Interest Expense
Amortized Bond Issuance Expense
Administrative Expenses
Additional Subsidy Provided
Total Expenses
Nonoperating Revenues and Expenses
Federal Contribution                                                  1,595.1       1,715.7
State Contributions                                                   146.8         146.2
Transfers from  (to) DWSRF                                             (91.9)         13.4
Total Nonoperating Revenues (Expenses)                                1,650.1       1,875.3
Increase (Decrease) in Net Assets                                       1,706.6       2,015.0
Net Assets
Beginning of Year                                                     42,544.3      44,250.9
End of Year                                                          44£5O9      46,265.9

Operating revenues exceeded operating expenses by $143 million. While the current low interest environ-
ment continued to depress CWSRF interest earnings, states have reduced their expenditures on bonds by
refinancing their debt at lower interest rates. The impact of reduced interest expenses on bonds could be
expected to benefit growth in net assets for the foreseeable future, particularly as rising market rates in-
crease earnings on investments.
Operating revenues are also affected by the additional subsidies in the form of grants or principal for-
giveness that have been required since the FY2010 CWSRF appropriation. The subsidies reduce the prin-
cipal and interest repayments to the program, which benefit borrowers but at the same time reduce pro-
gram revenues. The subsidy also increases the operating expenses. Administrative expenses were at their
lowest level since 2009.
CWSRF program equity (net assets) increased by $2.0 billion in FY2015. Program equity has increased by
at least $1 billion in 24 of the last 25 years. This reflects the states' efforts to minimize expenses while
maximizing funds awarded for projects.
                                      2015 Annual Report | 7

Statement of Cash Flows (Millions of Dollars)
Statement of Cash Flows
Operating Activities
Cash Draws from Federal Capitalization Grants
Contributions from States
Loan Disbursements (Including Additional Susbidy)
Loan Principal Repayments
Interest Received on Loans
Administrative Expenses
Total Cash Flows from Operating Activities
Noncapital Financing Activities
Gross Leveraged Bond Proceeds
Bond Issuance Expense
State Match Bond Proceeds
Cash Received from Transfers with DWSRF
Interest Paid on Leveraged and State Match Bonds
CWSRF Funds Used for Refunding
Principal Repayment of Leveraged Bonds
Principal Repayment of State Match Bonds
Net Cash Provided by Noncapital Financing Activities
Cash Flows from Capital and Related Financing Activities
Investing Activities
Interest Received on Investments
Release (Deposit) of Leveraged Bond Debt Service Reserve
Net Cash Provided by Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents
Beginning of Year
End of Year




                                      2015 Annual Report | 8

Statement of Net Assets (Millions of Dollars)
Statement of Net Assets
Cash and Cash Equivalents
Debt Service Reserve - Leveraged Bonds
Loans Outstanding
Unamortized Bond Issuance Expenses*
Total Assets
Match Bonds Outstanding
Leveraged Bonds Outstanding
Total Liabilities
Net Assets
Federal  Contributions
State Contributions
Transfers - Other SRF Funds
Other Net Assets
Total Net Assets
Total Liabilities & Net Assets
* Unamortized Bond Issuance Expenses are costs that have been
costs will be recognized (amortized) over time over the remainini
consistent with GAAP.
incurred but have not been fully recognized (amortized). These
; life of the bonds outstanding, similar to a pre-paid expense, and
Total assets increased by $483 million while total liabilities decreased by $1.5 billion; as a result, net as-
sets increased by $2.0 billion, or 4.6 percent. Total program assets have grown by 28 percent in the last
ten years while liabilities decreased by 8 percent, reflecting the strong overall growth of the CWSRF. Total
Assets have grown at a slower rate from FY2012 through FY2015 than in many of the previous years.
This is believed to be due lower overall levels of leveraging activity, combined with a steady reduction of
funds held in debt service reserves.
                                       2015 Annual Report |  9


   WRRDA  Expands  CWSRF  Project Eligibilities

The CWSRF can fund a wide variety of water quality protection efforts. State innovations and statutory
changes have resulted in an evolution of project eligibilities since the program was authorized in 1987.
The program's flexibility and range of project eligibilities enable states to target CWSRF funds to their
specific water quality priorities. Congress established the program in 1987 with three eligibilities: the
construction of publicly owned treatment works (POTWs), the implementation of a state nonpoint source
management program, and the development and implementation of a National Estuary Program
Comprehensive Conservation  and Management Plan.

In  1996, EPA published The Clean Water State Revolving Fund Funding Framework, which established
guidance for identifying and prioritizing nontraditional projects in an effort to move toward a watershed
approach to water quality management that addresses both point and non-point sources of pollution.
Building on the solid foundation laid by the Funding Framework, EPA completed the final draft of The
Clean Water State Revolving Fund Program: Tapping Its Untapped Potential White Paper in 2007. The
White Paper is a compilation of the many nontraditional CWSRF eligibilities under its original statutory

In  2009, the American Recovery and Reinvestment Act created the Green Project Reserve, which
increased the CWSRF's focus  on green infrastructure, water and energy efficiency, and environmentally
innovative projects by requiring states to direct a percentage of their capitalization grant to these types of
projects. Subsequent appropriations maintained this focus. Most recently, the Water Resources Reform
and Development Act (WRRDA) of 2014 amended the CWSRF. This expanded the program's eligibilities
from three to 11. The new eligibilities are broadly defined, providing the opportunity to fund many new
project types, especially in the areas of water conservation and stormwater.

The flexibility provided by the  new eligibilities offers the CWSRF additional opportunities to address the
most pressing state water quality issues. Many states on the East Coast face challenges managing
stormwater. Privately owned,  regulated stormwater is now eligible, opening the door to such opportunities
as public-public and/or public-private partnerships for green infrastructure.

                                    2015 Annual Report | 10

As the Western U.S. faces record drought, the SRFs now have greater flexibility to fund water reuse
projects. Not only can SRFs provide financial assistance to POTWs for water reuse, they can now fund
industrial reuse and recycled water distribution lines on private property. Even some aspects of
desalination projects may be eligible for CWSRF assistance.

The states have already taken advantage of WRRDA's expanded eligibilities. For example, several states
are considering funding projects that correct inflow and infiltration of privately owned sewer laterals for
houses. These projects will prevent excess water from entering the sewage system, resulting in a
reduction in pumping and treatment needs. This leads to energy savings at the POTW.

The WRRDA amendments add a great deal of flexibility to the types of projects and activities fundable
under the CWSRF program. But at the end of the day, what is funded is a state decision. EPA has several
initiatives underway to facilitate the sharing of ideas amongst states.
CWSRF Program Eligibilities
   Construction of POTWs

   Nonpoint source projects

   National estuary program projects

   Decentralized wastewater treatment systems


   Reducing the demand for POTW capacity through water conservation, efficiency, and reuse

   Watershed pilot projects

   Energy efficiency

   Reusing or recycling wastewater, stormwater, or subsurface drainage water

   Security measures at POTWs

   Technical assistance to POTWs
                                       2015 Annual Report | 11

CWSRF  Success  Stories
         Region 10
         Hood River, OR: Restored in-stream flow to
         the Hood River and its tributaries by con-
         verting open irrigation canals to a pressur-
         ized, sub-surface piping system that annual-
         ly conserves 6 billion gallons of water and
         produces enough energy to power 2,000
         average homes.
                                                     Region 7
                                                     Monona, IA: Replaced crushed stone park-
                                                     ing lot with permeable pavers to infiltrate
                                                     stormwater runoff and reduce the impact of
                                                     erosion on nearby Silver Creek.
           Region 8
           Coalville, UT: Because the state classified
           the assistance recipient as a hardship com-
           munity the CWSRF program partnered with
           USDA to provide a loan and grant package
           that will finance a new WWTP at zero per-
           cent interest over the twenty year repay-
           ment period.
                Region 9
                Glendale and Mesa, AZ: These cities part-
                nered to develop Low Impact Development
                design standards and guidelines that were
                compiled to develop a LID toolbox for the
                communities. The Cities endeavored to lead
                by example by considering the integration of
                LID into all municipal projects.
The Clean  Water State Revolving Fund is an essential
source of affordable financing to communities across the
country. Each program demonstrates the power of part-
nerships to innovate and excel in protecting public health
and water  quality.
                               2015 Annual Report | 12

        Region 5
        Berne, IN: Installed a system for more ef-
        fective removal of ammonia-nitrogen, brin:
        ing the assistance recipient into compliance
        with NPDES permit limits and saving more
        than $1.5 million dollars in interest as com-
        pared to other sources of financing
             Region 1
             Maine Forest Service: Provides CWSRF fi-
             nancing, through a linked-deposit program,
             for the implementation of forestry best
             management practices throughout the
             state. The state has provided/authorized
             up to $12 million to increase the use of
             environmentally friendly logging equipment
             and improving water quality in and around
             logging operations.
                                                                             Region 2
                                                                             Rome, NY: Planted street trees and urban
                                                                             forests to improve water quality and provide
                                                                             other benefits such as increased wildlife
                                                                             habitat, carbon sequestration, and im-
                                                                             proved neighborhood aesthetics.
                                                                   Region 3
                                                                   Moorefield, WV: Built a new regional WWTP
                                                                   incorporating nutrient removal technologies
                                                                   that eliminate 90,000 pounds of nitrogen
                                                                   and 93,000 pounds of phosphorous annu-
                                                                   ally from wastewater discharges in the
                                                                   Chesapeake Bay watershed.
Region 6
El Reno, OK: Financed the construction of a
modern WWTP that will eliminate impermis-
sible discharges from the old lagoon treat-
ment system. CWSRF financing will save the
assistance recipient an estimated $5 mil-
lion in interest as compared to other
sources of financing
Region 4
Albertville, AL: Upgrades to sludge dryin:
equipment allowed the local WWTP to re-
duce biosolid volume and reclassify it as
safe for land application. The process also
generates biogas that is redirected as fuel
for the dryers, saving300,000 kilowatt
hours per year.
                                                 2015 Annual Report | 13

 State  Agencies That  Manage  CWSRF Programs
EPA Region 1—Boston, Massachusetts
Connecticut Department of Environmental Protection
Connecticut Office of the Treasurer
Maine Municipal Bond Bank
Maine Department of Environmental Protection
Massachusetts Water Pollution Abatement Trust
Massachusetts Department of Environmental Protection
New Hampshire Department of Environmental Services
Rhode Island Clean Water Finance Agency
Rhode Island Department of Environmental
Vermont Department of Environmental Conservation
Vermont Municipal Bond Bank

EPA Region 2-New York, New York
New Jersey Department of Environmental Protection
New Jersey Environmental Infrastructure Trust
New York State Environmental Facilities Corporation
New York Department of Environmental Conservation
Puerto Rico Environmental Quality Board
Puerto Rico Infrastructure Financing Authority

EPA Region 3—Philadelphia, Pennsylvania
Delaware Department of Natural Resources and
Environmental Control
Maryland Department of the Environment
Pennsylvania Infrastructure Investment Authority
Pennsylvania Department of Environmental
Virginia Department of Environmental Quality
Virginia Resources Authority
West Virginia Development Authority
West Virginia Department of Environmental
West Virginia Infrastructure and  Jobs Development
                                    2015 Annual Report |  14

EPA Region 4—Atlanta Georgia
Alabama Department of Environmental Management
Florida Department of Environmental Protection
Georgia Environmental Facilities Authority
Kentucky Infrastructure Authority
Kentucky Division of Water
Mississippi Department of Environmental Quality
North Carolina Department of Environmental and
Natural Resources
South Carolina Department of Health and Environmental
South Carolina Budget and Control Board
Tennessee Department of Environment and
Tennessee Comptroller of the Treasury

EPA Region 5-Chicago, Illinois
Illinois Environmental Protection Agency
Indiana Department of Environmental Management
Indiana Finance Authority
Indiana State Budget Agency
Michigan Department of Environmental Quality
Michigan Municipal Bond Authority
Minnesota Pollution Control Agency
Minnesota Public Facilities Authority
Minnesota Department of Agriculture
Ohio Environmental Protection Agency
Ohio Water Development Authority
Wisconsin Department of Natural Resources
Wisconsin Department of Administration

EPA Region 6—Dallas, Texas
Arkansas Natural  Resources Commission
Arkansas Development Finance Authority
Louisiana Department of Environmental Quality
New Mexico Environment Department
Oklahoma Water Resources Board
Texas Water Development Board
                                        2015 Annual Report | 15

EPA Region 7—Kansas City, Missouri
Iowa Department of Natural Resources
Iowa Finance Authority
Kansas Department of Health and
Kansas Department of Administration
Kansas Development Finance Authority
Missouri Department of Natural Resources
Missouri Environmental Improvement and
Energy Resources Authority
Nebraska Department of Environmental

EPA Region 8—Denver, Colorado
Colorado Water Resources and Power Development
Colorado Department of Public Health and Environment
Colorado Department of Local Affairs
Montana Department of Environmental Quality
Montana Department of Natural Resources and
North  Dakota Department of Health
North  Dakota Public Finance Authority
South Dakota Department of Environment and Natural
Utah Department of Environmental Quality
Wyoming Department of Environmental Quality
Wyoming Office of State Lands and Investments
EPA Region 9—San Francisco, California
Arizona Water Infrastructure Finance Authority
California State Water Resources Control Board
Hawaii Department of Health
Nevada Department of Conservation and Natural

EPA Region 10—Seattle Washington
Alaska Department of Environmental
Idaho Department of Environmental Quality
Oregon Department of Environmental Quality
Washington Department of Ecology

To access these state program web sites please visit:
                                        2015 Annual Report |  16


The public health and environmental protection benefits provided
by the CWSRF wouldn't be possible without the dedicated imple-
mentation efforts of EPA's state partners. Their work is the foun-
dation of the program's success.

 or more information about the Clean Water State Revolving Fund, please contact us at:
United States Environmental Protection Agency
Office of Wastewater Management
Clean Water State Revolving Fund Branch
1200 Pennsylvania Avenue NW (4204M)
Washington, DC 20460

Phone 202/564-0752
Fax 202/501-2403
htto://www2 .e oa. gov/cws rf
Office of Water  •  March 2016  • EPA Publication NUMBER 832R16001