"Points For Municipal Issuers to Keep in Mind During Good Times"
Paul S. Maco, Director Office of Municipal Securities U.S. Securities & Exchange Commission

     "The folks whose money you borrow expect your disclosure to be true, just as they expect you to repay the money you borrow. Not surprisingly, so does the law. This is where we at the Securities and Exchange Commission come in. Federal securities law has protected investors for over sixty five years by requiring the information provided investors be accurate, complete and not misleading.
. . . . [B]ased on your disclosure, an investor may decide whether or not to buy your bonds. Some issuers consider this decision so important that they refer to bondholders as a second constituency. If your financial operations depend upon borrowing in the bond market as well as your tax base, you may understand how they come to feel this way. Each time you return to the bond market to borrow money, you ask this constituency to vote for you again. If bondholders are pleased with their first investment with you, they are more likely to

"vote" for you again through continuing to buy your bonds in the years ahead. 
Your bondholders' interest in the truth applies not only in the official statement - when you are hoping that bondholders will loan you their money at the lowest possible rate - but continues throughout the time you still owe them money.  From your bondholders perspective - when they look to you to provide timely and accurate annual financial information - this is an important time as well.  In this secondary market, after the closing, many investors may also first buy your bonds.  When they make that investment decision, it will be on the basis of the information you have made available.  As the Commission stated when adopting the amendments to Rule 15c2-12, "purchasers in the secondary market need the same level of financial information and operating data in making investment decisions as purchasers in the underwritten offering."  Given that bondholders attach great

significance to issuers continuing disclosure, it would seem to follow that issuers would be more than willing to provide it.  Yet one complaint that investors have consistently voice over the past several years is over the unwillingness of some issuers to provide annual information on a timely basis.  Aside from being "investor unfriendly," stale disclosure may carry its own problems for an issuer, particularly if the issuer is aware of material developments contrary to the picture provided investors in that stale disclosure.  The Commission has frequently warned issuers that the antifraud provisions apply to statements made in the secondary market.  So today's first point: respect your bondholders, it just makes sense.
Quotes from "Points For Municipal Issuers to Keep in Mind During Good Times", the remarks of Paul S. Maco, Director Office of Municipal Securities U.S. Securities & Exchange Commission At the Midwest Regional Public Finance Conference, Wichita, Kansas, February

There really is such a thing as a Free Lunch….
Laurie Krause, Accounting Manager, Johnson County WD #1

    Section 125(d) of the Internal Revenue Code allows employers to offer their employees the option to contribute part of each paycheck into qualified savings accounts in which the employee contributions are exempted from FICA and Federal/State income taxes.  The 3 most common savings accounts offered to employees are: 1) employee share of health insurance premiums 2) unreimbursed medical costs, and 3) dependent care costs.  The employer also saves the matching FICA taxes (currently 7.65%) on all employee contributions to the plan.

Water District No. 1 of Johnson County has had a 125(d) Premium only savings plan in place for over 10 years.  During that time, the District has saved over $200,000 in employer taxes on the participation amount and it is estimated that the District's employees have saved at least $654,000 in combined FICA and income taxes.

Effective June 1, 2000, the District has expanded its existing plan to also include an unreimbursed medical savings account and a dependent care savings account.  The medical account allows for a fixed portion of the employee's paycheck to be deposited, before tax, with a third-party administrator.  Then, as non-insured medical expenses are incurred,  the employee sends receipts to the Plan Administrator for reimbursement. The employee ends up paying for these types of expenditures with pre-tax dollars creating a personal tax savings of 25%-40%.

With the dependent care savings account, "before tax" payroll amounts are contributed to a savings account to pay for the care of children under 13 or dependent family members. The IRS has an annual maximum for dependent care accounts of $5,000. There is currently no stipulated IRS maximum for the medical savings accounts, however, most plans im

pose a maximum in the range of $2,000-$5,000.

Most 125 (d) plans  use a third-party administrator  who banks the employee contributions, processes the reimbursement requests, performs required non-discrimination tests and executes the annual 5500 filing.  While the administrator's fees can vary, in general, the annual FICA tax savings to the employer will be greater than the fees paid to the administrator.

As with any qualified IRS plan, the 125(d) plans are subject to certain limitations and rules that need to be clearly understood by both the employer and the employee. With good communication between all parties and careful planning by the employees, however, this is truly one of the few "zero cost" monetary benefits that can be offered to employees in today's competitive staffing environment.

Questions to: lkrause@waterone.org