Capital Fund

Question 1

JE To Record Bond Ordinance

Answer 1

Debit: Funding (CIF, Down payments on improvements deferred charges to future taxation
Credit: Improvement Authorization Funded, Improvement Authorization Unfunded

Question 2

JE Memo Entry

Answer 2

Debit: Estimated Proceeds of Bonds or Notes Authorized but not issued
Credit: Proceeds of Bonds or Notes Authorized but not issued

Question 3

JE Sale of Notes

Answer 3

Debit Cash
Credit: Bond Anticipation Notes Payable
Debit: Proceeds of Bonds and Notes Anticipated but not issued
Credit: Estimated Proceeds of Bonds and Notes Anticipated but not issued

Question 4

JE: Set up Ordinance which is completely funded by Capital Improvement Fund

Answer 4

Debit: Capital Improvement Fund
Credit: Improvement Authorization Funded

Question 5

JE: Cancel unexpended balance of fully funded improvement authorization

Answer 5

Debit: Improvement Authorization Funded
Credit: Capital Improvement Fund

Question 6

JE: To set up ordinance fully funded but through various sources

Answer 6

Debit: Fund Balance and Capital Improvement Fund
Credit: Improvement Authorization Funded

Question 7

JE: To cancel ordinance fully funded through various sources

Answer 7

Debit: Improvement Authorization Funded
Credit: Fund Balance (always goes back to Fund Balance if through mixed sources)

Question 8

JE: Set up Ordinance which involved mixed financing (funded and unfunded)

Answer 8

Debit: Capital Improvement Fund, Deferred Charges to Future Taxation Unfunded, Fund Balance, Capital Reserve
Credit: Improvement Authorization Funded
Improvement Authorization Unfunded

Memo Entry for unfunded portion
Debit Estimated Proceeds of Bond and Notes Authorized but not issued
Credit: Proceeds for Bonds and Notes Authorized but not issued

Question 9

JE: Cancel Ordinance which involved mixed financing (funded and unfunded)

Answer 9

Debit: Improvement Authorization Unfunded and Improvement Authorization Funded
Credit: Capital Improvement Fund, Deferred Charges Unfunded, Reserve, Fund Balance

Memo entry for unfunded portion - Reverse
Debit: Proceeds for Bonds and Notes Authorized but not issued
Credit: Estimated proceeds for bonds and notes authorized but not issued

Question 10

JE: To set up contracts payable or accounts payable or retained percentage due to contractor

Answer 10

Debit: Improvement Authorization Funded & Unfunded
Credit: Contracts Payable / Accounts Payable / Retained percentage due to contractor

Question 11

JE: Set up reserve for preliminary expenses

Answer 11

Debit: Capital Improvement Fund
Credit: Reserve for Preliminary Expenses

Question 12

JE: To Set up over-expenditure of ordinance appropriations

Answer 12

Debit: Over-expenditures
Credit: Improvement Authorization Funded or Unfunded

Question 13

JE: To set up interfund when budget appropriations have not been disbursed to the General Capital Fund

Answer 13

Debit: Due From Current Fund
Credit: Capital Improvement Fund, Down Payments on Improvements, Deferred charges to future taxation - unfunded

Question 14

JE: Issuance of Bond Anticipation Notes

Answer 14

Debit: Cash
Credit: Bond Anticipation Notes

Debit: Proceeds of Bonds and Notes Authorized but not issued
Credit: Estimated proceeds of bonds and notes authorized but not issued

Question 15

JE: Issuance of General Serial Bonds

Answer 15

Debit: Cash
Credit: General Serial Bonds
Accrued interest on Sale (due C/F MRNA)
Accrued interest on Sale - Reserve Interest Payable
Fund Balance (Premium on sale)

Debit: Proceeds of Bonds and Notes Authorized but not issued
Credit: Estimated Proceeds of Bonds and Notes Authorized but not issued

Debit: Deferred Charges to Future Taxation Funded
Credit: Deferred Charges to Future Taxation Unfunded

Debit: Improvement Authorization Unfunded
Credit: Improvement Authorization Funded

Question 16

JE: Reflect Payment of General Serial Bonds by current Fund

Answer 16

Debit: General Serial Bonds Payable
Credit: Deferred Charged to Future Taxation Funded

Question 17

JE: Reflect Payment of BANs by C/F

Answer 17

Debit: BANs Payable
Credit: Deferred Charges to Future Taxation Unfunded

Question 18

General Improvements

Answer 18

Borne by taxpayers of entire community

Question 19

Local Improvements

Answer 19

Borne by owners of properties specifically benefited by the improvement

Question 20

Down Payments on Improvements

Answer 20

NJSA 40A 2-11

• Cash down payment - 5% of amounts of bonds or notes authorized by bond ordinance
• Usually funded through Capital Improvement Fund - Transferred from C/F

Question 21

“Down Payments on Improvements” in Current Fund Budget

Answer 21

-usually associated with emergency appropriations when there is not sufficient money in the CIF

Question 22

Capital Improvement Fund

Answer 22

• used as down payment or to fund a portion or all of project, used for preliminary expenses
• Transferred from Current Fund Budget to CIF
• No time limit to be expended

Question 23

Capital Surplus

Answer 23

• Results when a project has been fully funded and the total amount of cash available has not been needed for completion of the project.
• Cancellation results in Capital Fund Balance

Question 24

Specific Reserves

Answer 24

• Appropriated in Current Fund Budget for specific capital fund projects
• Funds then transferred to Capital Fund
• Reserve may be accumulated through the years - “ pay as you go”

Question 25

Improvement Authorizations

Answer 25

-Appropriations created by ordinance to give spending authority for project

Question 26

External Sources of Fund

Answer 26

- Sale of Bonds or Notes - donations - state and federal grants

Question 27

State and Federal Grants as Sources of Funding

Answer 27

- if on draw down basis or cash is on hand, then can be used as down payment - If reimbursable, can not be used as down payment - When anticipated, authorize debt in full amount, once funds are received then reduce debt authorized.

Question 28

Bond Ordinance

Answer 28

No Expenditure may be made from any of the above sources of funding without adoption of an ordinance describing the project and specifying source of funding

Question 29

Local Bond Law

Answer 29

NJSA 40A-2

Question 30

Capital Budget in Local Budget

Answer 30

- Capital Budget required for sum of line item is over $25,000 and/or capital ordinance is foreseen. - For municipalities with population 10,000+, 4 to 6 years - For municipalities with population under 10,000- 3 years; can omit capital plan if expenditures less than $25,000 in the three previous years - statement of intent, does not commit

Question 31

Capital Plan

Answer 31

Moving schedule or timetable of major construction projects and other improvements. -Each year the program is reviewed, revised and projected another year ahead.

Question 32

Methods of Financing

Answer 32

- Bond Ordinances - Establishes spending authority and gives authorization to issue debt - Capital Improvement Fund - Capital Fund Balance - Re-appropriation Ordinances - Current Fund Appropriation - Pay as you go - Deferred Charges to Future Taxation- Ordinance has been adopted but no bonds or notes issued - Resolution for Preliminary Plan expenses

Question 33

Authority to Spend for Capital Projects

Answer 33

- Capital Budget does not appropriate funds | - All appropriations made through current budget, ordinance, capital surplus or reserve

Question 34

Purpose for which bonds can be issued

Answer 34

- borrow money for capital improvement for property that lawfully may be made or acquired, or for any purpose for which the local unit lawfully may make an appropriation - Can not authorize for improvement or purpose having useful life less than 5 years - Bond ordinance averages useful life of all projects - Repairs to equipment that extend life 5+ years can be bonded

Question 35

Capital Budget Amendments

Answer 35

-Capital Program can be amended by resolution and filed with DLGS within 3 days

Question 36

Bond Ordinance Contents

Answer 36

- authorization to issue obligations - statement of estimated amounts - estimated cost of each purpose - useful life of each purpose - average useful life of all purposes - statement that SDS has been filed

Question 37

Bond Ordinance Intro & Adoption

Answer 37

- Introduced by majority vote - Ordinance must be published with notice of its introduction and the date, time and place of hearing - Hearing must be 10 days after introduction - Publication must be one week prior to adoption - At hearing can be read by title if full ordinance was posted on bulletin, otherwise read in full - Adopted by 2/3 full membership - Adopted ordinance must be published in summary - Take effect 20 days after first publication of final adoption

Question 38

Estoppal Period

Answer 38

-20 days after first publication of final adoption

Question 39

Bond Ordinance Amendment

Answer 39

-If amendment is substantially altering matters, determined by bond counsel, the ordinance can not be adopted until at least one week after such amendment and publication at least 2 days prior to date for further consideration

Question 40

Accrued Interest

Answer 40

- If settlement occurs before July 1st, it is used to pay portion of the interest on the bonds that fall in current year (6 months after date of bonds) - If settlement occurs after July 1st, no interest will be payable during the current year. May be considered anticipated revenue in C/f budget to offset budget appropriation for Interest on Bonds

Question 41

Premium from sale of bonds

Answer 41

-Goes to Capital Fund Balance

Question 42

Refunding Bonds

Answer 42

- Issued in same general form as regular bonds | - Need approval from Local Finance Board