53 Pa. C.S. § 8028
(a) Gross nonelectoral and lease rental debt.--From the gross principal amount of all incurred debt shall be subtracted gross incurred electoral debt. The amount remaining shall then be separated into gross incurred nonelectoral debt and gross incurred lease rental debt.
(b) Net nonelectoral and lease rental debt.--Net nonelectoral and net lease rental debt shall then be determined by subtracting separately from gross nonelectoral debt and gross lease rental debt respectively, as may be applicable, and as the local government unit may desire to claim the following:
(1) All funds in the applicable sinking funds, whether controlled by the local government unit or by the authority which incurred the debt, reserve funds or accounts, except maintenance and replacement reserve funds or accounts, and net bond proceeds, held for the payment of the cost of a project financed by the debt, including, in each case, interest accrued thereon, but only to the extent that those funds are available for payment of the principal amount of the debt.
(2) The current appropriation for the payment of the principal of and overdue interest on the nonelectoral debt or for the payment of the net lease rental in the case of lease rental debt, except to the extent that the same has already been deposited in sinking funds.
(3) The uncollected amount of the benefits or costs or the estimates thereof which have been or are authorized to be assessed against owners of property and for which liens may be legally filed, to the extent that the assessments are available for the payment of the principal amount of the debt.
(4) The amount of delinquent taxes from prior years and other undisputed municipal liens actually filed against property less the sum of:
(i) A reserve, reasonable in amount, for so much thereof as may not be collected.
(ii) The amount thereof appropriated for current expenses in the current year's budget.
(5) The amount of self-liquidating debt, subsidized debt and debt issued to fund an unfunded actuarial accrued liability, properly excluded and concurrently excludable from each respective category being computed.
(6) The amount of surplus cash not specifically appropriated to any purpose and available for the payment of the principal amount of debt, but if this deduction is claimed, the amount so claimed may not thereafter be appropriated to any purpose except the payment of debt.
(7) All other solvent debts due the local government unit directly, the payment of which can be enforced as one of the unit's quick assets, and which have not been committed to any other purpose.
(8) The amount of any insurance coverage indemnifying the local government unit against any outstanding liability to the extent the liability is debt.
(c) Priority of applying exclusions.--In determining net nonelectoral debt, the amounts claimed under subsection (b)(8) shall be exclusively applicable to nonelectoral debt, and subsection (b)(4), (6) and (7) shall be first applied against nonelectoral debt, with any excess being applicable against lease rental debt.
(d) Valuation of legal investments.--In computing the value of any funds, all legal investments therein shall be computed at current market values.
(e) Use of debt determinations.--The net nonelectoral debt so determined shall be used in determining compliance with the limit imposed by section 8022(a) (relating to limitations on incurring of other debt). The sum of the net nonelectoral debt and the net lease rental debt so determined shall be used in determining compliance with the limit imposed by section 8022(b).
53 Pa.C.S. § 8028