CFO Exam Flashcards
What may a governing body increase its appropriations cap to if they pass a COLA ordinance?
3.5%
The Flexible Chart of Accounts (FCOA) is a coding system which categorizes:
Budget appropriations and revenues
What is an appropriation required by statute to cover the cash flow requirements of the school, county, and municipal obligations?
The Reserve for Uncollected Taxes
At the end of the second budget year, what happens to any remaining uncommitted appropriation reserves?
They are lapsed and returned to fund balance through journal entries
What is the difference between the amount of appropriations for the budget year and the anticipated revenues?
Amount to be raised by taxation
N.J.S.A. 40A:4-1, et. seq. references what law?
Local Budget Law
N.J.S.A. 40A:2-1, et. seq. references what law?
Local Bond Law
N.J.S.A. 40A:11-1, et. seq. references what law?
Local Public Contracts Law
N.J.S.A. 40A:5-1, et. seq. references what law?
Local Fiscal Affairs Law
*For a given budget year, when are budget transfers permitted between appropriation reserves?
During the first three months of the succeeding year
What are two functions that constitute a municipal budget?
Establish appropriations necessary to meet expenditures and the authority to tax to provide revenue
The certification of new construction or improvements by the local tax assessor, and the amount of local taxes what would have been generated, would increase:
The “CAP” base
What revenue is determined by subtracting from the total general appropriations in the budget the surplus anticipated, miscellaneous revenues, and receipts from delinquent taxes?
Amount to be raised by taxation
What are additions made to the budget after adoption?
Chapter 159 amendments
By statute, what is the deadline to adopt a temporary budget in a calendar year town?
January 31st
Miscellaneous revenues may:
Be anticipated in the budget up to the amount received in cash in the preceding year or be anticipated in the budget in an amount greater than was received in cash in the preceding year when supported by documentation
What type of budget is required to be adopted in New Jersey?
Line-item budget
The lower the estimated tax collection, the higher:
The reserve for uncollected taxes
A municipality with a population below 10,000 must adopt a capital budget program for how many years?
3 years
A municipality with a population above 10,000 must adopt a capital budget program for how many years?
6 years
N.J.S.A. 40A:12-1, et. seq. references what law?
Local Public Land and Buildings Law
Regulations concerning fiscal controls are established in which NJAC?
NJAC 5:30 et. seq.
Current Fund appropriations for accumulated absence liabilities must be:
Deposited in a dedicated trust fund, cannot be used for any other purpose unless first approved by the LFB, and must not exceed the value of the total accumulated absences, less any amount reserved from prior years appropriations, and held in the trust fund
How may tax maps, master plans, codifications, and revaluations be financed?
Special emergency notes
The debt limit of a municipality may not exceed what percentage of the prior three years equalized assessed real property valuations?
3.5%
*Unexpended funds in a capital ordinance may be:
Cancelled to capital surplus
What is the minimum useful life of a capital item under the Local Bond Law?
5 years
In which budget must a deficit in a municipal utility be raised?
Current Fund
*DLGS supervises municipalities under the Fiscal Supervision Act, which occurs when:
A default exists in the payment of bonded obligations; payments are due to state, county, or school districts for more than 2 years; a cash deficit amounts to more than 4% of the total tax levy; current tax collections fall below 70% for two successive years
N.J.S.A. 52:27BB-1 is also known as:
The Local Government Supervision Act
Local government unit employees appointed in a manner that is substantially similar to gubernatorial “advice and consent” must become members of:
Defined Contribution Retirement Program (DCRP)
Cash received from property owners for local improvement assessments must first be pledged to:
Assessment lien bonds and notes
*What does one tax point equal?
1/10,000th of the net valuation taxable
A certified copy of the budget must be transmitted to the county board of taxation not later than:
15 days following the adoption of the budget
What is the minimum down payment on most capital ordinances?
5% (Doesn’t apply to state grants)
T or F: A municipality cannot adopt a COLA ordinance if its budget cap referendum fails
True
T or F: Application fees collected by a municipality for the services of the public defender are deposited in the Current Fund
False - they are deposited in the Trust Fund
T or F: Any appropriation of fund balance from an authority or utility to the local governmental unit may not exceed 5% of the annual costs of operation of the appropriation or utility
True
T or F: Dedication by Rider resolutions allow a local unit to anticipate revenues to be received during the budget year
True
T or F: Property purchased for a sewer system is charged to and recorded in the general capital fund of the municipality
False - it is charged to the utility capital fund
T or F: Utility surplus may be appropriated by the governing body for use in the general municipal budget
True
T or F: Utility budgets are subject to the appropriations cap
False - they are funded by user fees
T or F: Contractually required severance liabilities resulting from layoff or retirement of employees may be funded through a special emergency appropration
True - and need permission from Local Finance Board
T or F: Municipal revenues may not normally be anticipated above the amount collected in the previous year for each type of revenue
True
T or F: Any appropriation in the current budget for accumulated absence liability is an in-cap expense
True
T or F: Health benefits costs are calculated net of employee message
True
T or F: The budget message must include a listing of appropriations split by cap
True
T or F: Unspent appropriations may be cancelled to surplus by the CFO in the same budget year
False - CFO doesn’t have the authority, only the governing body does
T or F: The Local Finance Board may grant waivers to Tax Levy Cap
False - there is no waiver of any kind
T or F: A bill received for sand and salt incurred on December 29, 2007, but received on January 8, 2008 may be charged to the 2008 calendar year budget
False - must be charged to 2007
T or F: Municipalities must establish a dedicated by rider trust account for the payment of off-duty police details
True
Debt service must be divided into what two categories?
Principal and Interest
Municipalities seeking to exceed their debt limit must apply to who?
Local Finance Board
The full balance remaining in the appropriation at the end of the budget year is held __________ unless cancelled by ________________
In reserve - resolution of the governing body
Each municipality must adopt temporary appropriations equal to ______ of the total budget appropriations of the prior year excluding the amounts for debt service, capital improvement, and public assistance within the first _____days of the budget year
26.25% - 30 days
In the following example what would be the maximum debt limit (in dollars)?
Year I: 13,000,000 EAV
Year II: 14,000,000 EAV
Year III: 15,000,000
Average = 14,000,000 x 3.5% = $490,000
The municipal budget must be published at least ____ days prior to the public hearing which must be at least ____ days after introduction
10 days - 28 days
- How are over-expenditures of appropriations required to be raised?
In full, subject to the “CAP”
How many days’ public notice is required for the public hearing on an amendment to the approved budget?
Three days
Municipal Authority and Utility finances must be:
Self liquidating and funded by user fees
After closing the public hearing on the municipal budget, the governing body may:
Amend the budget, adopt the budget, and/or continue the public hearing until another time
Local government unit employees appointed in a manner that is substantially similar to gubernatorial “advice and consent” must become members of:
Defined Contribution Retirement Program
Dedicated by Rider revenues are accounted for in which fund?
Trust fund
Who must approve Dedication by Riders prior to the spending of public funds?
Director of Division of Local Government Services and the governing body
GASB Statement 45 requires local governing bodies to disclose:
The liability and cost of post retirement health benefits
A municipality with a population of 23,650 must adopt a capital budget program for how many years?
6 years
The Division of Local Government Services requires the adoption of a capital budget where the cumulative cost of such items will exceed:
$25,000 with a useful life of at least 5 years
Emergency appropriations must be adopted by which vote?
No less than 2/3 of full governing body
If a capital budget affects the municipality’s master plan, it must be referred to the planning board how many days prior to adoption?
45 days
The appropriations for Pension and Social Security in a municipal budget are referred to as which type of expenditures?
Statutory expenditures
Special Assessment Notes may be issued to finance:
Sewer lines
A municipality that experiences cash flow problems may issue
Tax Anticipation Notes
The budget summary publication must cite:
Number of persons employed in the previous year budget and estimate of the number of employees for the current year, the municipal property tax levy for the previous year and estimate for the current year, the total amount to be raised by taxation and the total revenues from other sources in the current budget, and the total appropriations for the previous and current year budgets
Why is a copy of the adopted budget sent to the County Board of Taxation?
To certify the municipal tax rate
Unused tax levy cap amounts may be banked for how many years?
3 years
- A service transfer FROM Anytown, NJ to another local government unit or utility results in a ________ to the transferring unit’s cap base
Decrease
- A service transfer from another local government unit or utility TO Anytown, NJ results in a _________ to Anytown’s cap base
Increase
In local government, the Annual Financial Statement provides:
An unaudited report of the results of the prior year’s financial operations
- Monies transferred to a municipality by board of trustees of a municipal free public library may be anticipated in the municipal budget for the purpose of:
Reducing the amount to be raised by taxation in the municipal budget
The Local Finance Board is authorized by the “CAP” law to grant additional (blanket) exceptions to the limit on increases in final appropriations for what period of time?
Only effective for the local budget year
Resolutions authorizing the transfer of appropriations require what vote of the full membership of the governing body?
2/3 of the full membership
The authorization for municipal funds to be legally expended in New Jersey comes from:
The budget and bond ordinances
- The unemployment compensation law establishes the following financing methods:
Benefit Reimbursement Method and Contribution Method
- How many certified copies of the temporary budget must be filed with the Division of Local Government Services?
None
- The minimum amount which shall be annually appropriated and raised by taxes for Free Public Libraries is a sum equal to:
1/3 of a mil on every dollar of assessable property within the municipality on the equalized valuation
Retirement benefits can be granted to volunteer emergency service personnel upon:
Successful approval of a referendum of the voters of the jurisdiction
- The governing body may raise and appropriate funds to any fire district or volunteer fire company up to:
$150,000 (per each volunteer fire company)
With regard to First Aid Organization, the Chief Finance Officer must:
Receive an audit performed by a CPA or RMA, when the contribution exceeds $35,000
T or F: Utility surplus may be appropriated by the governing body for use in the general municipal budget
True
T or F: A fire district may appropriate surplus to a municipal budget
False
T or F: Municipalities are required to collect solid waste from apartment complexes if the same service is provided to other residential units within the municipality
True
T or F: Contributions to LOSAP programs are considered pension costs
True
T or F: A municipality who has received transitional aid may participate in the municipal self examination of its budget in the next budget cycle
False
T or F: Municipalities with a tax collection rate of 89.7% may participate in the municipal local budget examination process
False - must be 90% or better
What is the minimum tax collection rate for a municipality to be able to participate in the self examination process
90%
T or F: A municipality may calculate the current year reserve for uncollected taxes by reducing the prior year certified tax levy by the amount of tax levy adjustment resulting from adjudicated tax appeals
True
T or F: Municipalities may charge all costs for salt, equipment, and salary wages for snow removal to a snow removal trust account
True
T or F: Condo associations must be reimbursed for snow removal and street lighting
True
- T or F: Health benefit costs are calculated net of employee contributions for the annual budget
True
T or F: A municipality that receives transitional aid may make material increases or decreases to its budgeted revenues and/or appropriations after receiving the award
False
T or F: The Local Finance Board may grant property tax waivers
False - voters by referendum
T or F: A municipality cannot adopt a COLA ordinance if its Budget Cap referendum fails
True
T or F: Governmental units must account for accumulated absence time annually in the User Friendly Budget document
True
T or F: The amount of a regular emergency appropriation must be raised by taxation in full in the subsequent year’s budget
True - In cap expense, unless you get permission to get it out of cap
T or F: A mayor may set a fee for performing ceremonies such as civil unions or weddings
False
T or F: Any and all municipalities may participate in the Local Budget Self-Examination Process
False
T or F: Municipalities may establish a dedicated tax for historic purposes upon the approval of the voters
True - Open Space Tax
T or F: The Director of DLGS may substitute his or her judgment as to the level of municipal appropriations when reviewing local budget
False
T or F: A municipality may bond for a police car
False - A police car has a 3 year useful life so you cannot bond for it. An SUV has a 5 year useful life so you can bond for it.
T or F: Operating expenses may be bonded
False
T or F: Appropriation (1977) Cap Banking is automatic and allows a municipality to “bank” its final appropriation subject to the cap and 3.5% indefinitely
False - can only bank for 2 years
T or F: The Recreation Director of the Township Administrator may set fees for the Summer Camp Program
False - the governing body
T or F: Municipalities may establish a dedicated tax for historic purposes upon approval of the voters
True
T or F: The Monmouth County Improvement Authority may appropriate undesignated fund balance towards the Township of Howell for use in its budget
False - Can only ask local authority, not regional authority
T or F: Open Space Tax is a flat tax
True
T or F: A municipality may anticipate the proceeds of the sale of municipal property when the property will be sold during the budget year
False - proceeds of sale goes into a reserve account to reduce taxation
T or F: The amount of a regular emergency appropriation must be raised by taxation in full in the subsequent year’s budget
True
T or F: Contractually required severance liabilities resulting from layoff or retirement of employees may be funded through a special emergency appropriation
True
T or F: The budget must be published in full
False - published in summary
T or F: Each local unit must make available to the public supporting documents that provides appropriate detail covering the makeup of any revenue or appropriation no later than seven days prior to the public hearing on the budget
True
- No amendment of the budget can become effective without a public hearing and publication of the amendment, if the amendment:
- Adds a new item of appropriation in an amount in excess of ____ of the total amount of appropriations as stated in the approved budget, or
- Increases the amount to be raised by taxation by more than ____ unless the same is made to include an emergency appropriation, or
- Increases or decreases any item of appropriations by more than ____
1%, 5%, 10%
A governing body may increase its cap to ____ by passing a ________. The municipal budget must be published at least _____ days prior to the public hearing which must be at least ____ days after introduction.
3.5%, Cost of Living Adjustment (COLA) Ordinance, 10 days, 28 days
What are four exceptions to the Tax Levy Cap?
Health Benefits limit, increases in debt service, true emergencies, and pension costs
What are four exceptions to the Appropriations Cap?
Debt service, Reserve for Uncollected Taxes, shared services, pensions
Contingent in a municipal budget is limited to what percent of the total operations?
3%
- Equalized valuation represents:
The true value of all taxable property in the municipality
What is the difference between an organization’s income and expenditures?
Net cash flow
- A proper listing of detail of a prior years’ bill in the current budget would be:
Jones Service, Inc., 2009 Equipment Supplied, $500.00
Faulkner Act municipalities must hold public administrative budget hearings during which month?
November
- TANs must mature not later than:
120 days of the succeeding fiscal year
- Transfers of surplus from a municipal utility for use as a revenue in the municipality’s budget shall not exceed which percentage of the annual cost of the operation of the utility?
5% of the annual cost of operation of the utility
How is the maximum amount of delinquent taxes that may be anticipated determined?
The percentage of delinquent taxes collected in the prior year applied to the year end outstanding delinquent tax balance
Each local unit must make available to the public supporting documents that provide appropriate detail covering the makeup of any revenue or appropriation no later than how many days prior to the public hearing on the budget?
7 days prior to the public hearing on the budget
Unless cancelled by resolution of the governing body, the full balance in a line item appropriation at the end of the budget year is:
Held in reserve
The public hearing for the municipal budget cannot be held less than how many days after introduction and approval of the budget?
28 days
Bond Anticipation Notes may be issued for a period not exceeding:
One year, but can be rolled over to the duration of the useful life. Have to renew every year, after 10 years have to bond. Note = unfunded debt.
Emergency purchases and contracts may be executed if the emergent condition affects which of the following?
Public health, safety, and welfare
Amendments to the temporary budget require what vote of the governing body?
Two-thirds of the full membership
Tax maps, master plans, codifications, and revaluations may be financed with what type of notes?
Special emergency notes
A resolution approving a budget amendment requires what vote of the governing body?
Two-thirds of the full membership
The governing body of a municipality may advertise a summary of the budget if the publication contains at least:
Major sections, debt, number of persons employed, and location of where a copy is available
Unexpended funds in a capital ordinance may be:
Cancelled to capital surplus. If there is an ordinance, then it must be altered by ordinance.
- A municipality may alter a budget appropriation which is no longer needed during its budget year with:
Change in Text and Title Resolution
T or F: Municipalities may establish a dedicated tax for historic purposes upon approval of the voters
True
T or F: Governmental units must account for accumulated absence time annually in the User Friendly Budget Document
True
T or F: An authority may refuse the request of a municipality to appropriate undesignated fund balance to the municipal budget
True
The Manasquan Regional Sewerage Authority may contribute undesignated fund balance to Howell Township for use in its municipal budget
False - Since it is regional, they are not able to
- T or F: The amount of a regular emergency appropriation must be raised by taxation in full in the subsequent year’s budget
True
