2016 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 (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.
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, 2015 and June 30, 2016. The statements are
best viewed as non-audited, cash flow-based financial reports. We begin by providing the 2016 Financial
Highlights.
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.
2016 Financial Statements | 1
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2016 Financial Highlights
. In FY 2016, the CWSRF programs provided over $7.6 billion in funding.
. CWSRF program equity (net assets) totals $48.2 billion, a $1.8 billion or 3.9 percent
increase from 2015.
• Project disbursements increased by $883 million in FY 2016 compared to the
previous year. In FY 2016, $5.1 billion in principal and interest repayments were
received, an increase of 4 percent over FY 2015.
• Interest earnings from loans and investments totaled more than $1.2 billion,
allowing operating revenues to exceed operating expenses by $128 million.
. Leveraged bond proceeds added $1.9 billion to program cash flows in FY 2016,
allowing the CWSRF programs to fund additional projects. This was a threefold
increase compared to FY 2015.
• In FY 2016, states paid more than $2.4 billion in principal and interest on leveraged
and state match bonds, within 1.5 percent of the 9-year average.
• State match bond proceeds added $113 million to program cash flows in FY 2016, a
slight decrease compared to FY 2015.
2016 Financial Statements | 2
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Statement of Fund Activity (Millions of Dollars)
Annual Fund Activity FY 2015 FY 2016
Federal Capitalization Grants 1,870.6 1,517.9
State Matching Funds 268.3 274.7
New Funds Available for Assistance 5,515.5 6,789.3
Executed Assistance Agreements 5,757.7 7,628.2
Project Disbursements 5,111.0 5,994.3
Cash Draws from Federal Capitalization Grants 1,715.7 1,505.7
Total Annual Subsidy 130.5 175.0
Grants 26.5 41.6
Negative Interest 0.0 0.0
Principal Forgiveness 103.9 133.4
Cumulative Fund Activity
Federal Capitalization Grants 39,464.3 40,982.2
State Matching Funds 7,373.2 7,647.9
Funds Available for Assistance 113,772.8 120,562.1
Executed Assistance Agreements 111,102.7 118,730.9
Project Disbursements 97,351.6 103,345.9
Cash Draws from Federal Capitalization Grants 37,743.5 39,249.2
Total Cumulative Subsidy 4,100.4 4,275.4
Grants 485.7 527.3
Negative Interest 0.0 0.0
Principal Forgiveness 3,614.7 3,748.0
Cumulative Executed Assistance Agreements as a percent of Funds Available for Assistance ("pace") was
98 percent in FY 2016, 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 is a direct
result of the program's below market interest rates and flexible financing options, targeted marketing
and outreach initiatives, and effective program management.
2016 Financial Statements | 3
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Statement of Revenues, Expenses and Earnings (Millions of Dollars)
Operating Revenues FY 2015 FY 2016
Interest on Investments 296.3 250.3
Interest on Loans 997.1 1,004.9
Total Operating Revenues 1,293.3 1,255.1
Operating Expenses
Bond Interest Expense 915.8 874.5
Amortized Bond Issuance Expense 21.8 19.9
Administrative Expenses 55.0 58.4
Additional Subsidy Provided 130.5 175.0
Total Expenses 1,123.1 1,127.8
Nonoperating Revenues and Expenses
Federal Contribution (Cash Draws) 1,715.7 1,505.7
State Contributions 150.0 162.2
Transfers from (to) DWSRF 7.6 (7.9)
Total Nonoperating Revenues (Expenses) 1,873.2 1,660.0
Increase (Decrease) in Net Assets 2,043.5 1,787.3
Net Assets
Beginning of Year 44,378.0 46,421.5
End of Year 46,421.5 48,208.8
Operating revenues exceeded operating expenses by $128 million. While the current low interest
environment 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 increase earnings on investments.
Operating revenues are also affected by the additional subsidies in the form of grants or principal
forgiveness that have been required since the American Recovery and Reinvestment Act of 2009. The
subsidies reduce the principal and interest repayments to the program, which benefit borrowers but at
the same time reduce program revenues. The subsidy also increases the operating expenses.
CWSRF program equity (net assets) increased by $1.8 billion in FY 2016. This increase reflects the states'
efforts to minimize expenses while maximizing funds awarded for projects.
2016 Financial Statements | 4
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Statement of Cash Flows (Millions of Dollars)
Operating Activities FY 2015 FY 2016
Cash Draws from Federal Capitalization Grants 1,715.7 1,505.7
Contributions from States 150.0 162.2
Project Disbursements (Including Additional Subsidy) (5,111.0) (5,994.3)
Loan Principal Repayments 3,915.6 4,093.0
Interest Received on Loans 997.1 1,004.9
Administrative Expenses (55.0) (58.4)
Total Cash Flows from Operating Activities 1,612.3 713.1
Noncapital Financing Activities
Gross Leveraged Bond Proceeds 612.4 1,902.3
Bond Issuance Expense (7.7) (14.1)
State Match Bond Proceeds 118.3 112.5
Cash Received from Transfers with DWSRF 7.6 (7.9)
Interest Paid on Leveraged and State Match Bonds (915.8) (874.5)
CWSRF Funds Used for Refunding (161.6) (327.4)
Principal Repayment of Leveraged Bonds (1,515.7) (1,465.8)
Principal Repayment of State Match Bonds (155.1) (106.8)
Net Cash Provided by Noncapital Financing Activities (2,017.4) (781.9)
Cash Flows from Capital and Related Financing Activities 0.0 0.0
Investing Activities
Interest Received on Investments 296.3 250.3
Release (Deposit) of Leveraged Bond Debt Service Reserve 247.1 354.3
Net Cash Provided by Investing Activities 543.4 604.5
Net Increase (Decrease) in Cash and Cash Equivalents 138.3 535.8
Cash and Cash Equivalents
Beginning of Year 12,286.3 12,424.6
End of Year 12,424.6 12,960.4
2016 Financial Statements | 5
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Statement of Net Assets (Millions of Dollars)
Assets FY 2015 FY 2016
Cash and Cash Equivalents 12,424.6 12,960.4
Debt Service Reserve - Leveraged Bonds 4,389.9 4,035.6
Loans Outstanding 48,596.2 50,322.5
Unamortized Bond Issuance Expenses* 254.3 248.6
Total Assets 65,665.0 67,567.0
Liabilities
Match Bonds Outstanding 598.8 604.5
Leveraged Bonds Outstanding 18,644.8 18,753.8
Total Liabilities 19,243.6 19,358.3
Net Assets
Federal Contributions (Cash Draws) 37,743.5 39,249.2
State Contributions 5,329.4 5,491.6
Transfers - Other SRF Funds (511.9) (519.8)
Other Net Assets 3,860.5 3,987.8
Total Net Assets 46,421.5 48,208.8
Total Liabilities and Net Assets 65,665.0 67,567.0
* 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 outstanding, similar to a pre-paid
expense, and consistent with GAAP.
Total assets and total liabilities both saw an increase in FY 2016, by $1.9 billion and $115 million respec-
tively. As a result, net assets increased by $1.8 billion. This was a 3.9 percent increase from the previous
year and reflects the strong overall growth of the CWSRF programs.
Total assets have grown at a slower rate from FY 2012 through FY 2016 than in many of the previous
years. This is believed to be due lower overall levels of leveraging activity, additional subsidization, and
lower investment earnings. At the same time, Loans Outstanding continue to grow at a steady rate, in-
creasing 28 percent in the last ten years.
2016 Financial Statements | 6
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PISCES: Performance and Innovation in the
SRF Creating Environmental Success
The 29 year history of the CWSRF programs is a story of tremendous financial and environmental
success, but it is also a story marked by change. State programs don't have the luxury of remaining static
in their approach to infrastructure finance because the environmental and economic challenges
communities face are continually evolving. CWSRF programs and the communities they serve are
collaborating to meet infrastructure challenges head on, and their efforts are producing tangible results.
The funding partnership between borrower and funding agency is a well spring of creativity that produces
infrastructure solutions and safeguards public health and water quality.
EPA's Performance and Innovation in the SRF Creating Environmental Success (PISCES) Program
proposes to bring these efforts to light and recognize individuals at the community level for their hard
work and dedication. In 2017, PISCES will recognize eligible recipients that make innovative contributions
to the advancement of water quality through the CWSRF programs. Projects will be recognized based on
their merits under the following evaluation criteria:
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Water Quality, Public
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Health, or Economic ¦ Sustainability
Innovation
Benefits
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Participation in PISCES is voluntary, but EPA welcomes participation from all CWSRF programs. In the
spring of each calendar year, a national call will go out inviting states to nominate one project for
recognition. States that elect to participate will fill out a nomination template that describes the project
and how it satisfies one or more of the evaluation criteria. Nomination templates must be submitted to
EPA by July 1 of each year. Once approved, a certificate of recognition will be prepared for the recipient
community for each project. Approved projects and their associated funding agencies will also be
published in an annual project compendium produced by EPA.
2016 Financial Statements | 7
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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
www.epa.gov/cwsrf
Clean Water
State Revolving Fund
Office of Water • March 2017 • EPA Publication 832R17007
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