Luzerne County shows conflicting figures on outstanding debt

By Jennifer Learn-Andes -


The math isn’t adding up regarding Luzerne County’s outstanding debt.

The county paid $24.2 million toward debt last year, leaving the expectation the grand total would decrease by that amount.

However, the recently issued 2015 audit shows the county owed a total $351 million in principal and interest at the end of last year — an increase of $4.47 million compared to the prior year audit.

The increase becomes more puzzling because the county completed a massive debt restructuring last year that wasn’t supposed to add to the bottom line.

Former county county manager Robert Lawton had announced in May 2015 that the restructuring package would save $4 million in 2015 and reduce the county’s outstanding debt by $10,176 instead of increasing it as expected.

Councilwoman Eileen Sorokas has presented the conflicting numbers to the administration and her council colleagues.

“Numbers can be played with really easy, and that bothers me,” Sorokas said Friday.

County Budget/Finance Division Head Brian Swetz reviewed the audits and debt spending Friday and reached two conclusions:

• The total outstanding debt projections in the 2014 audit didn’t factor in all the interest owed on variable-rate debt, which made up about 40 percent of the portfolio. The effect: the overall tally was too low, Swetz said. The audit noted this disclaimer in a paragraph preceding the outstanding debt figures.

This isn’t an issue with the 2015 figures because the debt restructuring converted all but 4.7 percent of the outstanding debt to a fixed rate, Swetz said.

• The county was forced to incorporate a $16.2 million early termination fee and other closing costs into future-year payments when the debt was restructured, Swetz said.

The county could not afford to pay these expenses up front in addition to the $24.2 million annual debt repayment, Swetz said.

The impact of the early termination fee and other costs was not made clear in Lawton’s May 2015 announcement.

Sorokas said she’s not attacking the decision to restructure about $110 million in debt, which extracted the county from an inherited 2006 bond containing spiraling fees.

“I just want to make sure the figures we’re presenting to the public are accurate,” she said.

Swetz provided evidence Friday that audit projections are not set in stone if they are heavy on variable-rate borrowing.

The county’s 2013 audit valued the outstanding debt at $371.7 million the end of that year and contained an estimate the debt repayment for 2014 would be $25.2 million.

The actual total payment required for 2014, due to the variable-rate debt: $28 million, Swetz said.

Swetz said he’s confident the audit projection going forward will be accurate because most of the interest rates are predictable.

The county is budgeted to pay $26 million toward the debt this year, which should reduce the overall debt to around $325 million for the start of 2017.

According to the 2015 audit, the county’s $351 million in debt is scheduled to be paid in 2030. The refinancing extended the repayments previously set to end in 2027, the audit said.


By Jennifer Learn-Andes

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

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