Public municipal finance tools
Municipal Debt Coverage Calculator
Compare available resources with existing and proposed annual debt service. Explore headroom against your own local target under transparent assumptions.
No account required. Start with an editable sample.
Reviewed · Editorial responsibility: Aurelius Civic
Results
Coverage with proposed debt
2.38×
- Current coverage
- 2.73×
- Stressed coverage with proposed debt
- 1.63×
- Proposed annual debt service
- $220,745.25
- User-selected local target
- 1.25×
- Available net revenue
- $4,100,000.00
- Required available revenue with proposed debt
- $2,150,931.56
- Headroom (+) / shortfall (−) with proposed debt
- $1,949,068.44
Interpretation
Coverage depends on the entered numerator definition and annual obligations. Positive headroom means available revenue exceeds this entered target; it does not establish borrowing authority, covenant compliance, a credit rating, or approval. Stress assumptions are scenarios, not predictions. Review the breakdown and local governing documents.
Numerator definition and coverage breakdown
Selected context: Operating / enterprise planning estimate. Included revenue − operating expenditures excluding debt service + additions − deductions.
Entered basis and adjustment notes: Operating totals; additions: eligible recurring receipts; deductions: excluded receipts.
Existing annual principal $1,000,000.00 + interest $500,000.00 = $1,500,000.00. Proposed payment mode: fixed annual amortization.
Stress scenario: revenue change -10% and expenditure change 5%, applied once. Adjustments and existing/proposed payments stay fixed.
| Scenario | Numerator breakdown | Debt service denominator | DSCR | Required revenue | Headroom / shortfall |
|---|---|---|---|---|---|
| Current obligations | Revenue $10,000,000.00 − operations $6,000,000.00 + additions $200,000.00 − deductions $100,000.00 = $4,100,000.00 | Existing $1,500,000.00 + proposed $0.00 = $1,500,000.00 | 2.73× | $1,875,000.00 | $2,225,000.00 |
| With proposed debt | Revenue $10,000,000.00 − operations $6,000,000.00 + additions $200,000.00 − deductions $100,000.00 = $4,100,000.00 | Existing $1,500,000.00 + proposed $220,745.25 = $1,720,745.25 | 2.38× | $2,150,931.56 | $1,949,068.44 |
| Stressed with proposed debt | Revenue $9,000,000.00 − operations $6,300,000.00 + additions $200,000.00 − deductions $100,000.00 = $2,800,000.00 | Existing $1,500,000.00 + proposed $220,745.25 = $1,720,745.25 | 1.63× | $2,150,931.56 | $649,068.44 |
Methodology
Definition-dependent coverage
Select an operating / enterprise planning estimate or a custom local definition. Both use the entered included revenues and operating expenditures excluding debt service, plus documented additions and deductions. The context changes the meaning of the included amounts, not the arithmetic. Describe the scope and adjustments in the required notes and reconcile these amounts with your local documents. The selected context, notes, and each adjustment appear with the results.
Formulas
- Available net revenue = included operating revenue − included operating expenditure + additions − deductions.
- Existing annual debt service = annual principal + annual interest.
- Total proposed-case debt service = existing annual debt service + proposed annual payment.
- DSCR = available net revenue ÷ annual debt service.
- Required available revenue = user-selected target × annual debt service.
- Headroom (+) / shortfall (−) = available net revenue − required available revenue.
Current coverage uses only existing obligations. Proposed coverage adds the proposed payment. Stressed coverage uses both obligations with stressed revenue and expenditure totals. When annual debt service is zero, coverage is undefined rather than Infinity or NaN. Required revenue is then zero by arithmetic; the displayed headroom is not a coverage assessment. Negative net revenue, ratios, and shortfalls remain visible.
Proposed debt modes
Amortized mode assumes borrowing at Year 0, a fixed annual rate, full repayment over the entered whole-year term, and one payment at each year end beginning Year 1. Payment = P × r ÷ (1 − (1 + r)⁻ⁿ), where P is principal, r is the annual rate as a decimal, and n is years. At zero interest, payment = P ÷ n. The stable numerical implementation avoids cancellation at tiny rates. Direct mode uses the entered total proposed annual principal and interest instead; inactive mode inputs are ignored. Neither mode changes existing principal or interest payments.
Stress scenarios
Stress percentages are signed one-year changes: stressed revenue = revenue × (1 + revenue change ÷ 100), and stressed expenditure = expenditure × (1 + expenditure change ÷ 100). A −10% revenue change is a decline; a +5% expenditure change is an increase. Additions, deductions, the local target, and all debt payments remain fixed. Stress is optional and represents an assumption-based scenario, not a forecast, probability, or prediction.
Worked example
The sample includes USD 10,000,000 revenue, USD 6,000,000 operating expenditure, USD 200,000 additions and USD 100,000 deductions: available net revenue is USD 4,100,000. Existing annual principal USD 1,000,000 plus interest USD 500,000 gives USD 1,500,000 debt service and current coverage of 2.73×.
Proposed principal USD 3,000,000 at 4% over 20 years gives USD 220,745.25 annual payments. Combined debt service is USD 1,720,745.25; proposed coverage is 2.38×. At the editable illustrative 1.25× target, required available revenue is USD 2,150,931.56 and headroom USD 1,949,068.44. A −10% revenue and +5% expenditure scenario gives USD 2,800,000 available net revenue, 1.63× coverage, and USD 649,068.44 headroom. Displayed amounts and ratios round to two decimals; calculations use unrounded values.
Supported inputs and source
Annual amounts and proposed principal range from zero to USD 1 trillion each. Blank optional adjustments and stress percentages mean zero. Annual interest is 0–100%, debt term is a whole number from 1–50 years, and signed stress changes range from −100% to +100%. A local coverage target must be greater than zero and at most 100×. Reset and Load sample restore all amounts, notes, modes, and scenario assumptions.
GFOA: Debt Management Policy describes issuer-specific debt policies, revenue-debt coverage measures, bond provisions, and consultation with counsel and municipal advisors. This calculator’s simplified inclusion rules and annual conventions are defined above.
Limitations
DSCR varies by enterprise, pledged revenue, covenant, statute, accounting basis, and local policy. This planning estimate does not determine a credit rating, borrowing approval, statutory compliance, or covenant compliance. The sample 1.25× target is an editable example, not a universal legal or rating requirement. Reconcile the numerator, exclusions, adjustments, target, and debt schedule with bond documents, local laws, and advisor guidance.
The model omits reserve requirements, debt-service funds, issuance fees, capitalized interest, variable rates, balloon payments, monthly or semiannual schedules, debt peaks, refinancing, and tax/procurement constraints. A directly entered annual payment may represent a selected year; this tool does not project a full debt schedule. Stress changes only included revenues and operating expenditures and assumes adjustments and obligations stay fixed.