1. Jefferson County Financial Analysis

2. Jefferson County, Alabama Population: 660 thousand Home-rule

3. Jefferson County, Alabama Population: 660 thousand Home-rule Median Household43 thousand Per Capita26 thousand Below Poverty16.5 % Income (2010 Census) Better than the state of Alabama average

4. Jefferson County, Alabama Population: 660 thousand Home-rule In November 2011, filed for the most Expensive municipal bankruptcy

5. Jefferson County, Alabama Population: 660 thousand Home-rule In November 2011, filed for the most Expensive municipal bankruptcy 4.1 billion. 3.1 billion relating to sewer work

6. Overview County historically enjoyed low financing costs Financially stable county High revenue stream due to taxes Financial troubles due to sewer project (1990s) – Corruption – Non-performing investments – Complex financial instruments

7. Revenue Sources (2010)

8. Sales Tax more than 10%

9. Expenditures (2010)

10. DEBT SERVICE IS HIGH BURDEN High government cost 67% of expenditures for government costs and debt service

11. Current Ratio (Liquidity Ratio)

12. CRISIS

13. Debt to Total Asset Ratio (Leverage Ratio)

14. Debt to Equity (Leverage Ratio) FINANCIAL CRISIS

15. Times-Interest Earned (Coverage Ratio)

16. Return on Net Assets POOR PERFORMANCE OF INVESTMENTS

17. Financial Troubles Expensive sewer overhaul related project started in the 1990s In 2003 take advantage of low financing costs and refinance sewer bonds from fixed rate to lower but floating rate Entered complex financial derivatives market to hedge against interest rate increase Bought complex financial instruments as their own investment

18. Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt DEBT SERVICE BURDEN

19. Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt Investments did not perform – Fees actually cost the county even more money

20. Financial Crisis Investors lost confidence in county’s ability to repay debt – Bond interest rates soared – County couldn’t refinance their debt Investments did not perform – Fees actually cost the county even more money County filed for bankruptcy – 4.1 billion dollars total – 3.1 billion related to sewer overhaul