GFOA Exam Prep LMS Training: Understanding Government Compensation and Payroll

Question 1

What principle guides the content of an Official Statement (OS) in municipal securities?

Answer 1

Materiality is the guiding principle, indicating the level and content of disclosure provided.

Question 2

What role does pension obligation play in an issuer’s Official Statement?

Answer 2

Pension obligation disclosure should reflect its potential impact on the issuer’s ability to make bond payments.

Question 3

What does NABL stand for?

Answer 3

National Association of Bond Lawyers.

Question 4

What year did NABL issue guidance on pension funding obligations disclosure?

Answer 4

May 2012.

Question 5

What is a Defined Benefit (DB) pension plan?

Answer 5

Guarantees a set retirement benefit, with the employer assuming investment risk.

Question 6

What is a Defined Contribution (DC) pension plan?

Answer 6

Employees contribute to their retirement funds, bearing the investment risk.

Question 7

What is the significance of ‘materiality’ in the context of an OS?

Answer 7

Materiality determines the necessity and extent of information included in the OS.

Question 8

How often should issuers review and update the actuarial services contract?

Answer 8

At least every five years.

Question 9

What is a Section 218 Agreement with the SSA?

Answer 9

Allows for social security coverage under a state plan.

Question 10

What does FICA stand for?

Answer 10

Federal Insurance Contributions Act.

Question 11

What is the ‘regular’ rate of pay according to the FLSA?

Answer 11

An average of all compensation for a defined week or pay period.

Question 12

How is overtime calculated under the FLSA?

Answer 12

1.5 times the ‘regular’ rate of pay for hours worked beyond the standard threshold.

Question 13

What are the consequences of not adhering to FLSA overtime regulations?

Answer 13

Legal and financial penalties, including back wages and damages.

Question 14

How does the Affordable Care Act (ACA) impact payroll processing?

Answer 14

Requires employers to provide specific levels of health benefits or face penalties.

Question 15

What are the limits for retirement plan contributions set by the IRS?

Answer 15

Annually set by the IRS; affects tax treatments for contributions.

Question 16

What benefits does COBRA provide to employees?

Answer 16

Temporary health coverage after employment ends.

Question 17

Define the ‘vesting’ in pension and retirement plans.

Answer 17

The right of ownership to a retirement benefit after meeting certain criteria.

Question 18

What is a Summary Plan Description (SPD)?

Answer 18

Describes plan benefits, essential for participant knowledge and compliance.

Question 19

What impact does ERISA have on pension and retirement plans?

Answer 19

Sets standards for retirement and health benefit plan information disclosure.

Question 20

What are the key components of a pension and retirement plan audit?

Answer 20

Ensures valuation accuracy and reasonableness of methods and assumptions.

Question 21

How does the ‘Cadillac’ tax affect healthcare plans under the ACA?

Answer 21

Imposes a tax on high-cost healthcare plans to encourage cost control.

Question 22

What is the role of an actuarial audit in pension plan management?

Answer 22

Verifies the quality and compliance of actuarial services.

Question 23

How can governments address health care costs without reducing employee benefits?

Answer 23

Strategies include rebidding insurance contracts and promoting wellness programs.

Question 24

What strategies can be used to mitigate the risks associated with layoff or reductions in force?

Answer 24

Consider service level impacts, employee morale, and potential cost savings.

Question 25

What considerations should be taken into account when determining the level of disclosure about pension obligations in an OS?

Answer 25

Funding status, budget impact, legal restrictions, and trends material to investors.

Question 26

What are some techniques for reducing personnel costs in the near term?

Answer 26

Vacancy control, overtime monitoring, and addressing health care costs.

Question 27

How can vacancy control help manage personnel costs?

Answer 27

Ensures staffing does not exceed budgeted positions, controlling personnel costs.

Question 28

What is the purpose of conducting eligibility audits in relation to healthcare benefits?

Answer 28

Identifies ineligible dependents, reducing unnecessary health care expenditures.

Question 29

Why might governments use comp time instead of paying overtime?

Answer 29

Offers flexibility and can reduce overtime costs, subject to policy restrictions.

Question 30

What factors contribute to the need for more extensive disclosures about pension funding obligations in an OS?

Answer 30

Financial impact, revenue sources, legal constraints, and significant trends.

Question 31

What benefits are considered 'qualified' under a Section 125 Cafeteria Plan?

Answer 31

Health, adoption, dependent care benefits, among others, on a pre-tax basis.

Question 32

How do Defined Benefit and Defined Contribution plans differ in terms of employer risk?

Answer 32

DB plans guarantee benefits with employer risk; DC plans offer portability with employee risk.

Question 33

What are some examples of non-taxable fringe benefits?

Answer 33

Examples include employer-provided cell phones and qualifying meals.

Question 34

Why is the demographic diversity of state and local public finance a strength?

Answer 34

Enhances recruitment and mirrors public sector diversity.

Question 35

What challenges are associated with procuring actuarial services for OPEB?

Answer 35

Consider qualifications, experience with health benefits, and compliance requirements.

Question 36

What are 'deferred retirement option plans' (DROPs), and what is GFOA's recommendation regarding them?

Answer 36

Discourages their inclusion in benefit plans due to cost and sustainability concerns.

Question 37

Why is it recommended to conduct actuarial audits at least every five years?

Answer 37

Ensures actuarial work quality and plan's fiscal health.

Question 38

How does the 'silver tsunami' impact state and local public finance?

Answer 38

Increases workforce turnover and strains talent pipelines.

Question 39

What role does USERRA play in military leave for government employees?

Answer 39

Guarantees reemployment rights after military service.

Question 40

What are the main reasons for tracking time in payroll processing?

Answer 40

Pay calculation, compliance, accountability, and internal service cost tracking.

Question 41

What are the advantages and disadvantages of remote work policies?

Answer 41

Adjusts management planning, employee expectations, and IT infrastructure.

Question 42

How does FMLA impact payroll processing and employee benefits?

Answer 42

Requires unpaid leave for specified conditions, affecting staffing and benefits.

Question 43

What are the implications of not meeting IRS requirements for fringe benefits?

Answer 43

Taxable income adjustments and compliance with tax regulations.

Question 44

Why is a payroll processing checklist important?

Answer 44

Ensures accuracy, consistency, and compliance in payroll processing.

Question 45

What are the key findings from GFOA's report on public finance jobs?

Answer 45

Demand exceeds supply, creating staffing challenges in public finance.

Question 46

What strategies can governments employ to attract finance professionals?

Answer 46

Targeted recruitment, enhanced benefits, and highlighting public service importance.

Question 47

What is the 'Cadillac' tax and how does it affect health care plans?

Answer 47

Taxes high-cost plans to reduce health care expenses and encourage cost-effective benefits.

Question 48

What are the challenges and solutions for pension funding obligations disclosure?

Answer 48

Clarify the impact of pension obligations on financial health and bond creditworthiness.

Question 49

Why is monitoring and reporting crucial in payroll management?

Answer 49

Facilitates effective payroll management and compliance with laws and regulations.

Question 50

What are the benefits of tuition assistance programs, and how are they regulated?

Answer 50

Offers financial aid for education, subject to tax laws and organizational policies.