2014 League of Municipalities Convention Compliance with Selected Local Finance Notices Joseph P Monzo November 20, 2014
Agenda LFN 2000-14 Managing Police Off Duty Employment LFN 2002-1 Managing Accumulated Absence Reporting and Financing LFN 2003-15 Managing Third Party Payroll Disbursements LFN 2011-30 Residency Requirements for Public Employees Employment After Retirement
Police Off Duty Employment
LFN 2000-14 Police Off Duty Employment Common practice for officers to provide security for business and construction jobs, traffic control etc. Stems from AG opinion 1997-23. Only permissible IF an arrangement has been made between the private business and the municipality NOT THE OFFICERS DIRECTLY Officer cannot act in capacity unless being paid through the payroll system. This is where the accounting and rules come into play. Establish a fee for service for officer and vehicles. Should be in labor contracts. Admin fee is permissible. ( Possible budget revenue) Establish a trust fund by resolution and DLGS approval. Establish a formal policy adopted by the governing body to set rates and payment consistent with the FLSA Establish the process for assignment and who within the organization will manage this. Police officer many times. NOT THE UNIONS.
LFN 2000-14 Police Off Duty Employment Accounting Rules Must have funds in place from private contractor PRIOR to the off duty work being done. Many companies who use this a lot keep a bank with the town. No authority to charge the budget for non municipal work. Officers must be paid for the time within the next pay period by FLSA rules. Town does not want to get stuck having to fund private work Biggest problems are with the utility companies- Verizon, Comcast, PSEG, JCPL
Managing Accumulated Absences Reporting and Financing
LFN 2002-1 Managing Accumulated Absence Codified at NJSA 5:30-15 Addresses granting the benefit, accounting and disclosure of the benefit and authority to create trust funds to accumulate funding LEGAL AUTHORIZATION Labor contract Municipal or county ordinance Individual employee agreement ( managers, chiefs)
LFN 2002-1 Managing Accumulated Absence CFO must certify that sufficient documentation exists as to the amount of the time and that funds are available Copy of agreement, records for the time, value of time due Time and attendance systems, HR department, etc If documentation does not exist to the satisfaction of the CFO then, Employee must provide certification as to each time of accumulated absence GB may approve by resolution if documentation is not sufficient as long as funding exists
LFN 2002-1 Managing Accumulated Absence ACCOUNTING AND BUDGETING Through regular budget appropriations Not cap exempt Through special emergency notes- payable over 5 years Are cap exempt because it is debt service DLGS approved trust fund ( NJSA 40A:4-39), no further GB action CALCULATING AND REPORTING On the budget document by dept or by union- indicate source of authorization ( labor, ordinance, agreement) In the audit NOT IN FINANCIALS ( authorities only)- not GAAP accounting With the recent pension legislation and possible pending changes this has become a very costly endeavor Legislation proposed to limit $$$ going forward- keep an eye on this
Managing Third Party Payroll Disbursements
LFN 2003-15 Managing Third Party Payroll Disbursements Electronic Disbursement Controls for Payroll Purposes Codified at NJAC 5:30-17 provided formal authority to hore a third party payroll services to disburse funds on your behalf- i.e. taxes, garnishments etc Compliance required when: Use servicers to prepare and execute disbursements from bank account. Services take possession of local funds and make disbursements on behalf of unit
LFN 2003-15 Managing Third Party Payroll Disbursements- GB Requirements GB shall approve the use of disbursing organizations by ordinance Describe task to be performed inc data collection, report prep, with holding calculations, direct deposit transfer of funds to agency's accounts for subsequent payments Designate approval officer ie CFO Must be notified of any irregularities for potential fraud or non compliance with the law or incomptence on part of approval officer Transfer of funds to disbursing agency's acct is subject to Local Fiscal Affairs law
LFN 2003-15 Managing Third Party Payroll Disbursements- CFO shall qualify organizations CFO shall review and approve any contract May have to be bid depending on annual costs Disbursing Organization must provide evidence of satisfactory internal control SAS 70 (statement on auditing standards) annually Must have offices within a distance acceptable to the CFO so that reports can be delivered same day Less important now with Direct Deposit, on line banking etc
LFN 2003-15 Managing Third Party Payroll Disbursements- Contracts are not data processing services under the alw Contracts shall include termination provisions Contracts shall be in writing and executed by all parties including banks if they are paying as part of compensating balances agreement
Ameripay Issue The City of Summit was defrauded $1,359,935 when their payroll company, Ameripay LLC of Rochelle Park, New Jersey, neglected to pay the city's withholding taxes to the IRS. Instead, the funds were being redirected to investment firms held by Ameripay's principals, Sherbourne Capital Management and Sherbourne Financial. The City of Summit received approval from their local government finance board and the State for a bond to repay the IRS in full. The bond is to be paid back over 5 years. The impact is $39 per average taxpayer each year. Cotter said the calculation is based on the cost of the local property tax base in the residential, commercial and industrial sectors. He said the amount would be more or less the average based on the property tax. The County of Sussex also approached their local finance board for a bond and is jointly pursuing the case in bankruptcy court by sharing counsel with the Township of Vernon ($371,000 loss), the Kittatinny Regional School District and The City of Clifton ($900,000 loss). Approximately 22 municipalities, 10 schools districts, one county and numerous businesses were also impacted to the tune of approximately $8 million in total.
Residency Requirements for Public Employees
LFN 2011-30 Residency Requirements for Public Employees Know as the New Jersey First Act Public Law 2011 c. 70 eff. 9/1/11 amended a law that regulated government residency requirements Principal residence must be in NJ- majority of time, center of domestic life, residence for voting Hired after 9/1/11 have 1 year exemption to move Employed before 9/1/11 are exempted all together unless there is a 7 day break in service Hardship or critical need by committee review If exempted you cannot move out of state and continue employment
Employment After Retirement
Employment After Retirement (EAR) FAQ s have been removed from website for 2 years now Pensions passed Special rule effective 3/9/12 Passed without comment- that s why it was special Sent Certifying Officers letter 8/22/14 New Rule parameters: EAR to the same employer- must wait 180 days with no agreement, conversation, email etc relating to EAR EAR to a different employer must wait 30 days with no agreement, conversation, email etc relating to EAR These apply to any employer in NJ that has any of the pension systems Cannot even come back as a volunteer or a contractor
Employment After Retirement (EAR) Salary does not matter FT or PT does not matter NEW QUESTION TO ASK AT INTERVIEW The Certifying officer has to fill out a new form within 15 days whenever someone is hired who has retired from ANY pension system in NJ Prior employer info Current employer info- salary, date, title, status 2 Questions- 180 days question and prior arrangement question Penalty could be payback of pension collected