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
T or F: The Local Finance Board may grant waivers to Tax Levy Cap
False - must be done by referendum
T or F: BANs are considered unfunded debt
True - not permanent funding like a bond
T or F: The Director of DLGS may substitute his or her judgment as to the level of municipal appropriations when reviewing local budgets
False
T or F: A “cash deficit of the preceding year” is requited to be appropriated inside of “CAP” unless Local Finance Board approval is granted to raise the deficit outside of “CAP”
True
T or F: Application fees collected by a municipality for the services of the public defender are deposited in the current fund
False - Trust Fund
T or F: If a municipality does not maintain a general ledger accounting system or encumbrance system for the current fund it is ineligible for local examination of its budget
True
T or F: The budget summary publication must cite the location, phone number, and office hours of the principal municipal building where copies of the budget will be available to the public, and the name of the person or office if a person wants to receive a copy of the budget by mail
True
T or F: TANs may affect the credit rating of the local unit
True
T or F: A municipality may calculate the current year reserve for uncollected taxes by reducing the prior year’s certified tax levy by the amount of tax levy adjustment resulting from adjudicated tax appeals
True
T or F: The final principal payment in a municipal bond schedule of maturity may not be more than twice the first payment, unless the municipality receives approval for a non-conforming debt schedule from LFB
True
T or F: Refunding bonds require a down payment pursuant to Local Bond Law
False
What are four types of revenue in a municipal budget?
Tax Collection, Miscellaneous Revenue, Surplus, Delinquent Taxes
What are deferred charges?
Something you have to pay for in future years
What are some criteria that would disqualify a municipality from the local budget examination process?
Tax Collection rate below 90%, Cash deficit above 4%, Accelerated tax sale, No encumbrance system, Emergencies above 3%, and over the debt ratio
A tax lien sale held before the close of the budget year is known as:
an Accelerated Tax Sale
What is the statutory deadline for submitting the Annual Debt Statement?
January 31st
What is the statutory deadline for submitting the Annual Financial Statement?
February 10th
By what date must the local budget be introduced unless the date is modified by the Director of DLGS?
February 10th
Who must a municipality apply to if they are seeking to exceed their debt limit?
Local Finance Board
What is the difference between assets and liabilities?
Fund Balance
What does the certification of new construction increase?
The cap base
How are over-expenditures required to be raised?
In cap, in full
What is the minimum amount that shall be annually appropriated and raised by taxes for Free Public Library?
A sum equal to 1/3 of a mil of assessable property within the municipality on an equalized valuation
- T or F: Due From State of NJ for Senior Citizen Deductions can be anticipated as a revenue in the Current Fund Budget as non-cash surplus?
True - need approval from Director of DLGS
- T or F: Trust Assessment Fund cash is first pledged to the retirement of serial bonds?
True - first pledged to the retirement of debt
- How often is the Municipal Library Levy paid?
On a quarterly basis
- Are budget transfers from Capital Improvement Fund permitted?
No, they are never permitted
- What is the order of the Corrective Action Plan?
Finding/Condition; Recommendation; Explanation/Corrective Action; Implementation Date (FRED)
- Who mails out the Local Assessment Bills?
The Tax Collector
- Who oversees PERS and PFRS?
The NJ Department of Treasury
- Within how many days of the receipt of the audit report must the Corrective Action Plan be adopted?
60 days
- How often does is the CFO required to provide an accounting statement to the developer?
On a monthly basis if the monthly charges are greater than $1,000
- What does one tax point equal?
One ten-thousandth of the net valuation.
Example: Net Valuations = 800,000,000. Divide by 100 = 8,000,000 (drop last 2 0’s of original number). Multiply 8,000,000 x .01 = 80,000. Every time Amount to be Raised increases by 80,000, taxes increase one penny. (Or 800,000,000/10,000)
- When may you have to consult with the Local Finance Board?
- Default on bonds
- Tax Collection rate below 70%
- Cash deficit of the tax levy in excess of 4% for 2 consecutive years
- If a resident requests to inspect vouchers that were approved for payment at the most recent governing body meeting, when must the vouchers be made available to them?
Immediately
- When must a Financial Disclosure Form be filled out?
Income greater than $2,000, gifts greater than $400, Property within the state of NJ
- T or F: The Supplemental Debt Statement is filed between the 1st and 2nd reading of a bond ordinance
False - filed with Clerk prior to introduction
- T or F: If three different bond ordinances are introduced at one public meeting, only one supplemental debt statement is required.
True
- T or F: The anticipated revenue for Receipts from Delinquent Taxes is limited to the amount of revenue realized in the previous year
False - it comes from the AFS Sheet 26, has nothing to do with revenue from prior year
- T or F: The Annual Debt Statement is due upon introduction of a bond ordinance
False - Supplemental is due upon introduction
- T or F: Federal Single Audit is required if Federal Grant expenditures equals or exceeds $750,000
True
- T or F: The cash management plan can be amended at any time
True
- What does Gross Debt - Deductions equal?
Net Debt
- What does it mean to have liquidity?
To have securities that can be converted into cash
- Who is the chairperson of the Local Finance Board?
The Director of the Division of Local Government Services
- What happens to old escrow accounts?
They escheat to the State of NJ as unclaimed property
- T or F: Interest on Utility Assessment Debt is appropriated in the Current Fund
False - Water Operating Budget (If it was just interest on assessment debt, then interested is appropriated in the Current Fund)
- What type of vote is required for budget transfers?
2/3 majority vote
***May have to look up answer to this
- T or F: 2/3 Majority vote is required for Cancellation of Appropriations, Chapter 159’s, Budget Introduction, or Petty Cash?
False. 2/3 Majority Vote is not required
***May have to look up answer to this
- T or F: In regard to use of P-Cards, under no circumstance may a transaction exceed 15% of a municipality bid threshold
False - LFN 2017-13 abolished this
- T or F: Pursuant to Local Budget Law, municipalities are permitted to overspend a legal line item appropriation if the overall Current Fund Budget remains in a surplus position
False - Can’t over expend any line item
- What happens if a municipality carries a statutory excess in Reserve for Animal Control Fund at year end?
Excess is Due to Current Fund and recorded as MRNA (2 years prior revenues then become MRNA)
- Does the Director approve Budget Transfers?
No, the Director does not approve budget transfers
- T or F: The unexpended balance of debt service must be cancelled by resolution
False - it automatically lapses
- T or F: An emergency note can be issued in anticipation of the collection of taxes in a fiscal year
False - Tax Anticipation Notes can be issued (Emergency notes can only be for emergencies)
- T or F: Capital Budget must be adopted by a majority of the Governing Body
False - majority of the members present
*** Look this up
- T or F: Municipalities are permitted to negotiate with a vendor, after 2 attempts, responses to bids were too high and no bids were submitted
True
- T or F: If Trust Assessment Fund cash is less than the required budgeted amount to retire debt service, a required appropriation in the Current Fund budget is necessary to cover the deficit
True
- The number of miles of roads paved in terms of expenditures would be an example of what type of budgeting?
Performance Based Budgeting
- Does Maturity Schedule for Bonds need to be included in a Bond Ordinance?
No
- What type of vote is required for Budget Appropriation transfers during the last two months of the calendar year?
2/3 of full membership
- What would not be included in specifications for banking services?
Division of Local Government Services approval of the specifications
- Which does not create a deferred charge?
Prepaid Taxes applied to Taxes Receivable
- According to Best Practices, what should be on your website?
The past 3 years of adopted budgets, current year proposed municipal budget, the most recent financial statements, and the most recent audit.
- What does the Equalized Valuation represent?
The true value of all taxable property in the municipality
- Are derivatives a permissible investment?
No
- What may budget transfers during the last two months of the calendar year not be made to?
Deferred Charges, Reserve for Uncollected Taxes, Down Payment on Improvements, and Capital Improvement Fund
- What is the maximum amount of years for the Period of Usefulness?
40 years
- What must the Division of Local Government Services approve?
Petty Cash Fund, Change in Title and Text, Dedication by Rider, and Emergency appropriations in excess of 3% of operating appropriations
- What is your borrowing capacity based on?
Net Debt
- Are patrol cars bondable assets?
No because their useful life is less than 5 years
- Local Government Bonds may be sold privately except when the total of bonds exceeds what amount?
$1,000,000
- What are some examples of eligible shared services?
Joint collection of taxes, Joint municipal court, and Joint solid waste collection/disposal
- T or F: Dedication by Rider must be accounted for in the Current Fund
False - must be accounted for in the Trust Fund
- Who must approve Special Improvement Districts?
The governing body
- What should be contained in the budget message?
Explanation of appropriation and levy CAPS and a listing of appropriations split by CAP
- What is the correct procedure to adopt a budget?
- Introduction and Approval
- Public Advertisement
- Public Hearing
- Amendments
- Advertising & Public Hearing on Amendments (if necessary)
- Adoption
- If a municipality does not have an ethics board, who acts as the Ethics Board?
Local Finance Board
- What is the official type of budget required to be adopted?
Line Item Budget
- Payment of Utility Assessment Bond Principal is recorded as an expenditure in what fund?
The Utility Assessment Trust Fund
- What is not a proper way to distribute a tax overpayment?
Apply to the Amount to be Raised by Taxation
- What retirement system can Township Administrator be enrolled in as opposed to PERS?
Defined Contribution Retirement Plan (DCRP)
MC - may list administrator, CFO, mayor, etc.
- What did the 2010 CAP eliminate the add-on increases for?
The Reserve for Uncollected Taxes
** T or F: Transitional Aid must demonstrate that user fees have been established for discretionary services so that taxpayers are not subsidizing nonesessntial programs
True - User fees must cover new programs, not taxpayers
*On almost every exam
- What may unexpended bond proceeds not be appropriated to?
To fund additional capital improvement projects with a shorter useful life
- What may storm recovery reserve be used for?
Salt and sand purchases, snow removal, and salaries and wages
- Who does the local assessment receivable for each parcel of property fall on?
The Tax Collector
- What is Trust Assessment cash first pledged to?
The retirement of bonds and notes
- In what fund is gross utility debt reflected in?
The Water Capital Fund
- Is Dedication by Rider revenue easily estimated in advance?
No, amount of Dedicated by Rider revenue is not subject to a reasonably accurate estimate in advance
- What type of accounting is used in NJ municipalities?
Modified Accrual Basis
- Is the explanation of the tax rate required to be explained in the budget?
No
- Where must Annual Financial Statements be filed?
EMMA
- Is overtime a part of pensionable salary?
No, overtime is not pensionable
- What funds can payroll costs be found in?
Current Fund, Utility Operating Fund, Trust Fund, and General Capital Fund
(New question last exam)
- Where would we account for Utility Assessment Bond Principal?
In the Utility Trust Assessment Fund
- Are tax overpayments applied to the Amount to be Raised by Taxation?
No
Who must a municipality apply to if they decide to convert to State Fiscal Year from a Calendar Year?
Local Finance Board
When converting to State Fiscal Year, does a municipality adopt an ordinance or a resolution?
Ordinance
What is the type of vote needed to introduce, approve, amend, and adopt a municipal budget?
Not less than the majority vote of the full membership of the governing body
What are the statutory dates for CY and SFY municipality to introduce their municipal budget?
CY - February 10th
SFY - August 10th
If a municipality introduces their budget on February 6th and is going to hold a public hearing for the budget on March 6th, when is the latest they can publish?
February 24th (10 days prior)
T or F: Concerning amendments to an introduced budget - an increase or decrease to any item of appropriation by more than 5% would require public hearing on said amendment.
False
The amount to be raised by taxes for school purposes, required to be certified to the governing body of a municipality for inclusion in its budget, shall set forth in a separate section of the budget upon adoption and shall be added to the amount to be raised by taxes to which of the following?
School District tax rate
Special District tax rate
Municipal tax rate
None of the above
School District Tax Rate
The governing body may by resolution authorize temporary budget appropriations to provide for the period between the beginning of the fiscal year and the adoption of the budget. The resolution shall be adopted within how many days of the beginning of the fiscal year?
30 days
T or F: Nothing in the Local Budget Law shall prevent or relieve the governing body from making appropriations during the last 10 days of the year preceding the beginning of the fiscal year for all capital improvement fund purposes
False - for all debt service purposes
T or F: When emergency temporary appropriations are adopted after the introduction and approval of the budget and were not included in the budget as approved, the temporary emergency appropriation shall be included by amendment.
True
Which of the following is known as, in the current section of accounts shall consist of the excess of quick assets such as cash, investments, State or other public aid receivable, and deferred charges over legal and demand liabilities?
Statutory Charges Operations Account Surplus Reserve for Receivables None of the Above
Surplus
What is known as revenue amounts that may reasonably be expected to be realized in cash during the fiscal year from known and regular sources, or from sources reasonably capable of anticipation?
Miscellaneous Revenues Anticipated
Miscellaneous revenues when being anticipated in the municipal budget are limited to anticipated revenues to the amount:
Actually realized in cash from the same source in the next preceding fiscal year
A municipal governing body has determined that a parcel of land is no longer required for public use and so concluded that said parcel will be sold at auction. The parcel of land will generate sale proceeds that would benefit town property owners if anticipated in the municipal budget as a revenue. In order for the proceeds to be an anticipated revenue in the budget, the obligation to make payment to the municipality must be entered into prior to when?
Prior to adoption of the budget
When a municipality has a sinking fund cash surplus may, upon written application by the sinking fund commission and the approval of the director, be used, in whole or in part, as what type of revenue?
An anticipated miscellaneous revenue in the current fund budget
T or F: NJSA 40A:4-30 describes the amount to be raised by taxes as be part of the amount required to be levied by taxation for support of the municipal budget. It is the difference between the total of all general municipal budget appropriations, including Chapter 6 school debt service, and such deferred charges and statutory expenditures for Chapter 6 schools as are required to be raised in the municipal budget, less the total of anticipated revenues.
True
To the extent there is available surplus revenue collected by a municipality for supplying a utility service which is regulated by the Board of Public Utilities an amount of this utility may be transferred annually and included in the local municipal budget. This amount of surplus to be utilized may not exceed what percentage of the annual costs of operation of the utility?
5%
Dedicated revenues stated in the budget shall be classified according to their respective sources and shall be stated in a separate section of the budget, together with the appropriations to the purposes to which such dedicated revenues are applicable. The total of anticipated revenue must equal the total of appropriations. What accounts does this describe?
Trust Fund Accounts
Which of the following would meet the standard to qualify as a dedicated revenue for a trust fund account?
- Animal Control Fund
- Sinking fund for term bonds
- A bequest
- Motor vehicle fines dedicated to road repairs
- All of the above
All of the above
How shall an appropriation for “cash deficit of preceding year” be raised?
In full in the immediate successive year of the deficit
T or F: A capital budget adopted by the governing body authorizes the expenditure of public funds
False
Crossed off on review sheet
NJSA 40A: 4-45.2a authorizes that amounts of revenue generated by an increase in its valuations based solely on applying the preceding year’s local purposes tax rate of the municipality to the assessed value of new construction of improvements will result in what?
Increase to the CAP base
Which of the following groups of appropriations are exceptions to the budget CAP, or also known as outside CAP appropriations?
A. Debt service, capital expenditures, amounts expended to fund a free public library
B. Reserve for uncollected taxes, social security, federal grants, amounts to meet Public Employees’ Occupational Safety and Health Act
C. PERS, expenditures resulting from the impact of a hazardous waste facility, municipal court operations
A.
Not B because social security is in CAP
Not C because PERS and municipal court operations are in CAP
T or F: Unless emergency expenditures are eligible for bonding pursuant to the Local Bond Law, said expenditures shall be provided in full by the governing body as a deferred charge in the budget of the next succeeding fiscal year.
True
What type of vote is needed for authorizing the adoption of an emergency appropriation by the governing body?
2/3 vote of the full membership
The governing body of a municipality has appointed a purchasing agent holding a QPA certification and authorized a local bidding threshold of $29,000. The purchasing agent wishes to award a professional service agreement for $15,000. Pursuant to NJSA 40A:11-3b, the contract period may not exceed what length of time?
12 months
T or F: Every contract for goods and services that in the aggregate exceeds the bid threshold shall be awarded to the lowest responsible bidder. NJSA 40A:11-4 permits the governing body to reject the lowest bidder if the governing body is made aware of “prior negative experience” with any local contracting unit in NJ
False - must be the town’s negative experience, not someone else’s.
T or F: NJSA 40A:11-4.1 authorizes the use of competitive contracting in lieu of public bidding. Competitive contracting may be used for all types of goods and services
False - only for what is listed in the statute
Every audit required by the Local Fiscal Affairs Law is required to be completed by an accountant or auditor who holds an uncanceled license as:
Registered Municipal Accountant
The statutory responsibility for the filing of the AFS is assigned to which local government official?
CFO
A “local government officer” that serves on a local government agency that approves development applications would refer to a member of which board?
Planning Board
The Local Fiscal Affairs Law mandates that the Cash Management Plan be approved annually by the:
Governing Body
Local Bond Law stipulates that the maturities of all bonds shall be determined by the bond ordinance or by subsequent resolution and be within the following limitations:
- All bonds shall mature within the period or average period of usefulness
- All bonds shall mature in annual installments
- The governing body may provide for a single and combined bond issue
The effective date of a bond ordinance is what length of time?
20 days after first publication after adoption
T or F: All matters not requited to be contained in a bond ordinance may be acted on by subsequent resolutions passed by the affirmative votes of a majority of the full membership of the governing body
True
An increase in anticipated revenue from a known and recurring source may have what effect on the appropriation for the Reserve for Uncollected Taxes?
It would decrease the appropriation
The NJ Administrative Code outlines the procedure for the certification for the availability of funds. It is required that no resolution authorizing the entering into any contract shall be enacted unless it shall recite that such a certificate showing the availability of funds has been provided. In addition, what does it require the resolution to specify?
The resolution must specify the exact line item appropriation or ordinance to be charged
NJ Budget Law requires that the budget shall consist of a tabulated statement of:
All anticipated revenues applicable to expenditures for which appropriations are made
What are the four classifications of revenue described by Local Budget Law?
Surplus Anticipated, Miscellaneous Revenues, Receipts from Delinquent Taxes, and Amount to be Raised by Taxation
Implementation of a dedicated tax program for open space, recreation, farmland, and historic preservation trust fund taxing districts are authorized by which of the following?
- Governing Body resolution
- Approval of the Local Finance Board
- Referendum held at a general or special election
- All of the above
- None of the above
Referendum held at a general or special election
LFN
Local Budget Law permits the Tax Collection rate used to compute the RUT to be based on an average when the tax collection rate has been affected by tax refunds or adjustments from successful property tax appeals. How many years are included in the calculation of the average?
Three years
The limitation of a municipality’s debt limit shall be a percentage of the average of the preceding three years equalized assessed valuation. What is that percentage for a municipality? What is that percentage for a county?
Municipality - 3.5%
County - 2%
What is the value threshold established by the “Pay to Play” law at which a contract cannot be awarded by a NJ government entity?
$17,500
A bond ordinance adopted by the governing body should include authorization to provide for short term borrowing. According to Local Bond Law, the short term borrowing instruments are known as Bond Anticipation Notes and they may not be issued for a period of time exceeding how many years?
One year
Can be renewed up to 10 years, but must be renewed each year
All BAN’s shall mature and be paid not later than which anniversary of the date of the original notes?
Ten years
Local Bond Law requires that “prior to the passage on the first reading of any bond ordinance, or ordinance amending a bond ordinance, except amending as to matters which are not required to be contained in a bond ordinance or which does not increase the total amount of the obligations authorized by such bond ordinance”, the financial officer shall file with the office of the clerk which document?
Supplemental Debt Statement
Local Public Contracts Law permits contracts to be entered into that exceed the bidding threshold if the situation effects:
The public health, safety, or welfare of the community
What is the minimum number of days for the advertisement for the receipt of bids?
Ten days
NJ Administrative Code lists the general requirements for all change orders, one of those requirements is that:
Responsibility of change orders lies with the governing body
The total amount of a change order cannot exceed the original contract amount by more than how much?
20%
Local Budget Law requires that any anticipated deficit in expenditures to which dedicated revenues are applicable shall be provided for by an appropriation in the budget. The appropriation of the anticipated deficit would be included in which budget?
Current Fund Budget
Originally accounted for in Trust Fund, then deficit accounted for in Current Fund
What is the statutory deadline for filing the AFS for a SFY municipality?
August 10th
February 10th CY Municipality
What is the dollar amount threshold that must be exceeded in order for a property owner to file a complaint directly with the NJ Tax Court in the appealing of property assessments?
$1,000,000
Local Fiscal Affair Law permits the establishment of petty cash funds. With whom does the authority rest for the approval/disapproval of the petty cash fund?
Director of the DLGS
A NJ municipality is prohibited from increasing its tax levy by what percentage rate before permitted exclusions are added to the levy?
2%
Municipal Public Defenders Law contains a requirement for the accounting of application fees that are collected. It is required that the funds collected shall be deposited where?
Dedicated Trust Fund
Which of the following is an appropriation that would NOT be subject to limitation as provided by the NJ “CAP” Law?
- Audit Fees
- Police Salaries and Wages
- Utilities
- All of the above
- None of the Above
None of the above
T or F: The Local Government CAP Law addresses the permitted transfer of current year appropriations and reserve year appropriations. The statute prohibits the transfer of funds from an appropriation that is not subject to the limitation to an appropriation that is subject to the limitation.
True
It is required that the filing of an annual financial disclosure statement shall include the name, address, and each source of income earned by the local government employee or member of their immediate family in excess of what amount?
$2,000
Although there are exceptions for specific situations, Local Bond Law requires that the sale of bonds shall be sold at which type of sale?
Public Sale
It is required that no bond ordinance shall be finally adopted unless it appropriates to the purpose, or ratably to the respective purposes to be financed, in addition to the obligations thereby authorized, a sum as a down payment which is no less than what percent of the obligations?
5%
Local Bond Law permits the source of a down payment to be made available from which of the following:
A. By provision in a previously adopted budget(s) of the local unit for down payment or for capital improvement purposes
B. From money actually held by the local unit and previously contributed for such purpose other than by the local unit
C. By emergency appropriation
D. A & C only
E. A, B, and C
E (A, B, & C)
It is required that all municipal budgets be advertised in full or in a summary format prior to the date of a public hearing on said budget. The advertisement shall be published at least how many days prior to the date of the public hearing?
Ten days
Local Fiscal Affairs Law requires the Municipal Clerk to publish a synopsis of audit including recommendations in the official newspaper. This must be done within how many days after receipt of the annual audit?
Thirty days
Local Fiscal Affairs Law grants authority for the approval of claims. Who is the authority given to?
The governing body
To the extent there is available surplus revenue collected by a municipality supplying a utility service which is regulated by the Board of Public Utilities an amount not to exceed what percentage of the annual costs of operation of the utility may be transferred from the accounts of the municipal utility and included in the local budget as surplus revenue?
5%
If a municipality is going to anticipate as miscellaneous revenue the total amount of all payments due and payable to the local unit during the fiscal year as a result of the sale of property by the local unit, when must the obligation to make such payment be entered into?
Prior to the adoption of the budget
What is required to be contained in the contents of a bond ordinance?
Purpose of the obligation, Maximum number of bonds or notes, and a statement that shows the gross debt is increased by the authorization of such obligations
By what vote of the governing body must a bond ordinance be adopted?
At least 2/3 of the full membership
What is the minimum period of usefulness for any bond obligations?
5 years
Maximum = 40 years
Local Public Contracts Law authorizes the governing bodies of two or more contracting units to enter into a joint agreement for the provision of goods and services for use by their respective jurisdictions. The agreement shall be entered into by resolution of each jurisdiction and shall include which of the following?
- Categories of goods and services
- The manner of advertising for bids
- The manner for awarding contracts
- All of the above
All of the above
What is the basic elements of internal controls in a finance officer?
Prompt deposit of all funds, prohibition against cashing employees checks, and periodic surprise cash counts
What are some examples of where you may have to pay statutory expenditures?
Pensions, Social Security System, Unemployment Compensation and Temporary Disability Funds
In NJ, the budget system followed is known as:
Cash basis
A corrective action plan must be prepared and submitted to DLGS no more than how many days from the date the audit is received by the governing body?
Sixty days
Corrective Action Plan should be referenced in which legal notice that is published in the official newspaper?
Synopsis of audit report
The Local Public Contracts Law provides exceptions to the requirement of public advertisement for the award of agreement. Circumstances that would allow for the negotiation of a contract award are:
A. Contracting unit has advertised for bids on two occasions and on both occasions received no bids
B. Governing body has rejected bids on two occasions because prices were determined unreasonable
C. On one occasion there were no bids and on another occasion prices were determined unreasonable
D. All of the above
All of the above
T or F: It is required that for multi-year lease agreements, unless excepted by statute, to contain a clause making the agreement subject to the availability and appropriation annually of sufficient funds
True
An award of contract, except for professional services, may be awarded for a period of how many consecutive months?
24 months
All advertisements for bids on contracts for the collection and disposal of municipal solid waste shall be published not less than how many days prior to the receipt of said bids?
60 days
Bond anticipation notes MAY be sold at what type of sale?
Private sale
When selling bonds, all bidders shall be required to deposit a certified or cashier’s check equal to not less than what percentage of the bonds?
2%
Local Bond Law limits the amount of premium bid for bonds, which shall not exceed what amount?
$1,000
The legal depositories for public monies are to be authorized by whom according to section 14 of Local Fiscal Affairs Law?
Majority vote of the full membership of the governing body
The Local Fiscal Affairs Law requires certain employees to be bonded. According to section 34.1, employees may be covered by a blanket bond except for which of the following positions?
A. Tax Collector and Treasurer B. Tax Collector and Assessor C. Treasurer and Court Judge D. Court Judge and Tax Collector E. All of the above may be covered by a blanket bond
E - all of the above may be covered by a blanket bond
Budgets are adopted by what vote of the governing body?
Majority vote of the full membership
The Local Budget Law permits the transfer of current year appropriations during what type of the fiscal year?
Last 2 months of the fiscal year
What vote of the governing body is required to authorize the transfer of funds as permitted by the Local Budget Law?
2/3 of the full membership
Which Board is empowered to promulgate rules and regulations for the interpretation and administration of state laws within jurisdiction of the Division of Local Government Services?
Local Finance Board
What is an agency that is created to perform specific functions within a municipal county or region, that by law is required to be self-liquidating and their budgets and operations are the responsibility of the elected governing body and its management?
A municipal utility
Every financial institution permitted to be a depository of public funds is required to have what certification?
Governmental Unit Deposit Protection Act (GUDPA)
T or F: The Local Fiscal Affairs Law allows municipalities and counties to invest in government money market mutual funds
True
Emergency authorizations are regulated by the Local Budget Law. This section requires what amount of regular emergency authorization to be appropriated by the governing body?
The full amount in the next succeeding fiscal year
What is an obligation of funds by a local unit arising from the issuance of a numerically controlled purchase order or contract?
Encumbrance
As permitted by NJ Budget Law, emergency appropriations may be financed from which of the following?
A. Bond Anticipation Notes B. Surplus C. Emergency Notes D. A&C Only E. B&C Only
E - Surplus and Emergency Notes Only
The following definition applies to what according to Local Budget Law: The current section of accounts shall consist of the excess of quick assets such as cash, investments, State or other public aid receivable, and deferred charges over legal and demand liabilities
Surplus
Local Budget Law allows an appropriation for contingent expenses in an amount not more than what percentage of the total appropriations for operating purposes?
3%
The Capital Improvement Program is either a three year or a six year plan and schedule for capital projects showing projected costs and revenue sources. What is the population threshold that would require adoption of a six year plan?
Over 10,000
A payment process requires a purchase order system to have a particular document as part of the purchase order and this same document is the basis of payment. The document is:
A voucher
What term is described as: The value calculated for each municipality by the state Division of Taxation. It is intended to represent, as nearly as possible, the true value of all the taxable property within a municipality. The process relies heavily on analysis of sales of property in the municipality.
Equalized value
Local Public Contracts Law authorizes a guarantee to accompany a bid. The guarantee is payable to the contracting unit. When a bid award is made, the bidder will furnish any performance bond or other security as a guarantee or indemnification. The guarantee shall be in what amounts?
10% of the bid, not in excess of $20,000
Without taking any action to authorize an exception, a contracting unit shall award the contract or reject all bids within such time as specified in the invitation to bid, but in no case more than how many days?
60 days
The sale or other disposition of personal property is guided by the Local Public Contracts Law. With exceptions considered, the sale must be authorized by governing body action and the property sold at public sale if the value of the property is in excess of what amount?
15% of the authorized bid threshold
Local Bond Law permits adoption of a bond ordinance in excess of the statutory debt limit for which events?
Fire, flood, or other disaster
T or F: Multipurpose bond ordinance obligations may be provided for in a single issue of oblications
True
The CAP Law places limitation of increases of municipal budget appropriations. A statutorily permitted amount to be added to the CAP base is what percent?
2.5% OR the index rate, whichever is less
Local Budget Law authorized the Local Finance Board to adopt rules that permit municipalities to conduct annual local examination of the annual budget. The first phase of the process is determination of eligibility by the DLGS. The second phase is program qualification. Who determines qualification?
Chief Financial Officer
Technical Accounting Directive requiring the accounting for fixed assets sets the threshold for “nonexpendable, tangible personal property” at what amount for both municipalities an counties?
$5,000
What describes: The total structure of records and procedures which discover, record, classify, and report information on the financial position and operations of a governmental unit or any of its funds, balanced account groups, and organizational components
Accounting System
T or F: The three methods used by a tax assessor to determine values of real property are: sales approach, replacement approach, and income approach
True
T or F: “Dedicated revenues” are defined and regulated within the Local Budget Law, which requires any anticipated deficit in expenditures to which dedicated revenues are applicable shall be provided for by an appropriation in the operating budget
True
For the municipal budget, the public hearing shall not be held less than how many days after the approval of the budget in the case of a municipality
28 days
T or F: One of the criterion requiring a public hearing for the amending of an approved budget would be if the budget amendment increases or decreases any item or appropriation by more than 1%
False - 10%
An appropriation transfer would not permit a transfer from an appropriation for:
Deferred Charges
The issuance of Tax Anticipation Notes are permitted, but also limited as to amount and maturity, by Local Budget Law, TANs may be renewed from time to time, but all such notes and any renewals thereof shall mature in the case of a municipality within how many days after the beginning of the succeeding fiscal year?
120
The anticipated revenues from the operation of any utility or enterprise owned or operated by a local unit and the appropriations to be made therefore shall be set forth how in a municipal budget?
In a separate section of the budget
Municipal Public Defenders Law requires the DLGS as part of their budget review to determine if the amount of money in a dedicated trust fund exceeded by what percentage the amount expended for providing public defender services during the preceding year. The excess of that percentage shall be remitted by the municipality to the NJ Criminal Disposition and Review Collection Fund. What is that percentage?
25%
What does one tax point equal?
One-ten thousandth of net valuation taxable
T or F: Local Bond Law permits the sale of bonds at one time or in installments
True
Local Bond Law mandates the CFO of each local unit, that before the end of the first month of each fiscal year, the officer shall make and file in the office of the Clerk and the Director, under oath and as of the last days of the preceding fiscal year, which document from the following?
Annual Debt Statement
According to Section 45 of the Local Bond Law, any municipal public utility that has cash receipts in a fiscal year sufficient to meet operation and debt charges without recourse to general taxation is considered to be:
Self-liquidating
The annual audit is required to be completed within how many months of the end of the fiscal year?
6 months
T or F: The amount of revenue generated by an increase in a municipalities’ valuations based solely on applying the preceding year’s local purposes tax rate of the municipality to the assessed value of new construction or improvements, or on applying the preceding year’s county tax rate to the apportionment valuation of new construction or improvements has no effect on the CAP base of either
False - value of new construction adds to the CAP base
T or F: All debt service, including that of Type I school district is excluded from CAP limitations?
True
T or F: Local Public Contracts Law permits the implementation of an energy savings improvement program if it is determined that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program’s energy conservation measures in an energy savings program
True
The Local Public Contracts Law prohibits a municipality from receiving bids on which days?
Mondays and any day directly following a State or Federal Holiday
