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 (GAAP) established by the Governmental Accounting Standards Board (GASB). States often define their CWRSF programs as ongoing enterprise funds under the GASB definitions of funds. 2017 Financial Highlights • The CWSRF programs provided over $7.4 billion in funding. In just the past two years alone, over $15 billion in low cost financing went to 2,825 high priority projects. • Cumulatively, the CWSRF programs have provided over $126 billion over the past 30 years. • Almost 3 percent increase ($1.4 billion) in CWSRF Program Equity (net assets), for a cumulative total of $49.6 billion. • Nearly $6.3 billion was disbursed for projects, which is a $200 million increase from the previous year. • Earnings from loans and investments exceed bond and administrative expenses by $272 million. • Leveraged bond proceeds added an additional $2.2 billion to program cash flow, which is $351.8 million greater than the amount added in the previous year. 2017 Financial Statements | Page 1 ------- National aggregate financial statements have been developed using data entered in EPA's National Information Management System between July 1, 2016 and June 30, 2017, Because the 51 CWSRF programs are independent state-level entities, no nationally audited CWSRF program financial reports are available. The financial statements are non-audited, cash flow-based financial reports. The four statements are described below. Statement of Fund Activity (Page 2) 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 (Page 4) 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 (Page 5) Provides a detailed accounting of the actual flow of cash into and out of the CWSRF fund. Statement of Net Assets (Page 6) 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. 2017 Annual Report | Page 2 ------- Statement of Fund Activity (Millions of Dollars) Annual Fund Activity FY 2016 FY 2017 Federal Capitalization Grants 1,517.9 996.5 State Matching Funds 284.8 215.2 New Funds Available for Assistance 7,260.6 6,577.2 Executed Assistance Agreements 7,625.2 7,422.9 Project Disbursements 6,078.4 6,285.3 Cash Draws from Federal Capitalization Grants 1,505.7 1,259.7 Total Annual Subsidy 183.0 294.5 Grants 46.8 100.7 Negative interest 0.0 0.0 Principal Forgiveness 136.2 193.8 Cumulative Fund Activity Federal Capitalization Grants 40,982.2 41,978.7 State Matching Funds 7,654.0 7,869.2 Funds Available for Assistance 121,562.0 128,139.2 Executed Assistance Agreements 118,683.4 126,106.3 Project Disbursements 103,819.6 110,104.9 Cash Draws from Federal Capitalization Grants 39,249.2 40,508.9 Total Cumulative Subsidy 4,294.0 4,588.6 Grants 532.4 633.1 Negative Interest 0.0 0.0 Principal Forgiveness 3,761.6 3,955.5 Cumulative Executed Assistance Agreements as a percent of Funds Available for Assistance ("pace") remains at 98 percent, continuing the trend of successfully directing CWSRF funding towards projects that address many important water quality problems. Below market interest rates, flexible financing options, and effective outreach contributed to the ongoing success of the CWSRF programs. 2017 Annual Report | Page 3 ------- Statement of Revenues, Expenses (Millions of Dollars) and Earnings Operating Revenues FY 2016 FY 2017 Interest on Investments 251.8 256.7 Interest on Loans 1,009.9 973.5 Total Operating Revenues 1,261.7 1,230.2 Operating Expenses Bond Interest Expense 874.3 879.7 Amortized Bond Issuance Expense 19.4 18.1 Administrative Expenses 57.1 60.1 Additional Subsidy Provided 183.0 294.5 Total Expenses 1,133.8 1,252.3 Nonoperating Revenues and Expenses Federal Contribution (Cash Draws) 1,505.7 1,259.7 State Contributions 172.2 150.4 Transfers from (to) DWSRF (12.9) (1.9) Total Nonoperating Revenues (Expenses) 1,665.0 1,408.2 Increase (Decrease) in Net Assets 1,792.9 1,386.1 Net Assets Beginning of Year 46,425.4 48,218.2 End of Year 48,218.2 49,604.3 Operating Expenses exceeded Operating Revenue by $22,1 million. This small deficit reflects the fact that $294.5 million in additional subsidy was provided in FY 2017 to promote non-traditional projects and support disadvantaged communities. Revenue from loans and investments exceeded bond and administrative expenses by $272.4 million. 2017 Financial Statements | Page 4 ------- Statement of Cash Flows (Millions of Dollars) Operating Activities FY 2016 FY 2017 Cash Draws from Federal Capitalization Grants 1,505.7 1,259.7 Contributions from States 172.2 150.4 Loan Disbursements (Including Additional Subsidy) (6,078.4) (6,285.3) Loan Principal Repayments 4,102.3 3,930.7 Interest Received on Loans 1,009.9 973.5 Administrative Expenses (57.1) (60.1) Total Cash Flows from Operating Activities 654.5 (31.1) Noncapital Financing Activities Gross Leveraged Bond Proceeds 1,863.6 2,215.4 Bond Issuance Expense (14.1) (19.4) State Match Bond Proceeds 112.6 64.8 Cash Received from Transfers with DWSRF (12.9) (1.9) Interest Paid on Leveraged and State Match Bonds (874.3) (879.7) CWSRF Funds Used for Refunding (26.4) (23.0) Principal Repayment of Leveraged Bonds (1,483.8) (1,464.5) Principal Repayment of State Match Bonds (106.8) (65.8) Net Cash Provided by Noncapital Financing Activities (542.2) (174.1) Investing Activities Interest Received on Investments 251.8 256.7 Release (Deposit) of Leveraged Bond Debt Service Reserve 521.3 39.2 Net Cash Provided by Investing Activities 773.1 295.9 Net Increase (Decrease) in Cash and Cash Equivalents 885.4 90.7 Cash and Cash Equivalents Beginning of Year 12,555.0 13,440.4 End of Year 13,440.4 13,531.1 2017 Financial Statements | Page 5 ------- Statement of Net Assets (Millions of Dollars) Assets FY 2016 FY 2017 Cash and Cash Equivalents 13,440.4 13,531.1 Debt Service Reserve - Leveraged Bonds 4,022.9 3,983.7 Loans Outstanding 50,753.5 52,813.5 Unamortized Bond Issuance Expenses* 251.2 252.5 Total Assets 68,467.9 70,580.9 Liabilities Match Bonds Outstanding 604.4 603.5 Leveraged Bonds Outstanding 19,645.3 20,373.1 Total Liabilities 20,249.7 20,976.6 Net Assets Federal Contributions (Cash Draws) 39,249.2 40,508.9 State Contributions 5,497.8 5,648.2 Transfers - Other SRF Funds (524.8) (526.8) Other Net Assets 3,996.1 3,974.0 Total Net Assets 48,218.2 49,604.3 Total Liabilities and Net Assets 68,467.9 70,580.9 * Unamortized Bond Issuance Expenses are costs that have been incurred but have not been fully recognized (amortized). These costs will be recognized (amortized) over time over the remaining life of the bonds outstand- ing, similar to a pre-paid expense, and consistent with GAAP. Loans Outstanding increased by over $2 billion, and is a main contributor to the over $2.1 billion increase in Total Assets. Federal and State Contributions helped increase Net Assets by nearly $1.4 billion. The $22.1 million decrease in Other Net Assets is mainly due to the increased use of additional subsidy in FY 2017. 2017 Financial Statements | Page 6 ------- For 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 Clean Water State Revolving Fund www.eoa.gov/cwsrf c/EPA Office of Water • March 2018 • EPA Publication 830R17007 ------- |