GFOA ANNUAL CONFERENCE

County Fiscal Affairs Session – County CAP’s

September 18, 2014

Gerry Seneski, Chief Financial Officer, The County of CumberlandDave Miller, Chief Financial Officer, The County of MercerJoe Kovalcik, Chief Financial Officer, The County of Morris

COUNTY CAPS

Two CAP’s – 1977 and 2010 both Levy CAPS

Problem – which one do we use Alternative Minimum CAP CAP’s can equal Have to choose which CAP

IMPACT ON RATINGS

There is a greater emphasis on CAP room

Financial Flexibility – Fund Balance provides this Can also lead to issues once your fund

balance begins to diminish

SOURCES OF ADDITIONAL CAP ROOM Increase revenues

Review rates and charges Greater use of Cost Allocation Plan Increase in New Construction Greater use of Fund Balance – Can lead to

future financial issues

PLANNING IS KEY

Hope is not an action plan Watch labor contracts with back end

deals or high step movement Other arrangements that escalate over

time Try to raise your taxes annually Work your way to one CAP START PLANNING

NOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!

ARE CAP EXCEPTIONS REALLY EXCEPTIONS

Good news – with exceptions your levy can go up 6%

Bad news – there is no way that your Freeholders will approve this levy increase

Public expects minimal tax increase – 2% CAP

LEGISLATIVE RELIEF

None – the two CAP’s are here to stay Learn how to manage and plan within

the 2 CAP environment Alternatives:

Increased CAP Banking – allow for more years or permit a reserve of 3% of budget ongoing. This will help with Credit Ratings

Allow each year CAP Bank even when switching between the 1977 and 2010 CAP

GFOA ANNUAL CONFERENCE

County Fiscal Affairs Session – County Finances

September 18, 2014

Gerry Seneski, Chief Financial Officer, The County of CumberlandDave Miller, Chief Financial Officer, The County of MercerJoe Kovalcik, Chief Financial Officer, The County of Morris

COUNTY FINANCES

What are the effects of Managed Medicaid going forward? Do you have a Nursing Home?

Do you have plans on selling your nursing home? What’s the market? CAP Based Adjustment in the next year

COUNTY FINANCES

Housing Market – What are the effects on your County Clerk Revenues? As the interest rates begin to rise what will

be the effect on our revenues? Plan wisely

COUNTY FINANCES

Health Care – what is the effect of the ACA? HCR Tax kicking in in 2015 To go self-insured or not to go self-insured The exceptions are not the same for the

1977 and 2010 CAP’s

COUNTY FINANCES

Cash Flow Items – Still very low interest earnings Change in how our County Aid Funds being

received in 2015 Reimbursements from your grants

COUNTY FINANCES

Rating Agencies Planning, Planning and more planning

Fund Balance Projections Future year budget projections Policies – Fund Balance and Debt Succession Planning

COUNTY FINANCES

P Card usage Do we have the proper internal controls

and procedures in place? Sign off and reviewing Ensure compliance with TAD 85-1

Vendor Claimant Certification What is it’s purpose? Why do we still have it?

GFOA ANNUAL CONFERENCE

County Fiscal Affairs Session – Internal ControlSeptember 18, 2014

Gerry Seneski CPA, RMA, CCFO, CMFOChief Financial OfficerThe County of Cumberland

COSO

Committee of Sponsoring Organizations of the Treadway Commission

Original Report 1992 Essentially a response to the S&L Crisis

Embraced by most as the National Standard Including GFOA & AICPA Plenty of written guidance available

WHAT IS INTERNAL CONTROL?

Internal Control is a process, effected by management, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance.

How does the role of Management differ from that of the Auditor?

OBJECTIVES

Operations – Effectiveness and Efficiency; operating and financial performance goals; and safeguarding assets.

Reporting – Reliability, timeliness and transparency. Proper decisions based upon proper information.

Compliance – Laws and Regulations.

INTERNAL CONTROL COMPONENTS

Environment

Risk Assessment

Activities

Information and Communication

Monitoring

ENVIRONMENT

The “Tone at the Top” how are problems handled?

Management demonstrates a commitment to Integrity and Ethical Values. Accountability.

Proper hierarchy of staff. Commitment to attract, develop and

retain competent individuals. Do things right AND do the right things.

RISK ASSESSMENT

Risk = the possibility that an event will occur that adversely affects the achievement of objectives. Mistakes/Errors vs. Theft/Fraud

Misunderstandings due to inadequate knowledge

Performance Risk Risk from external influences (storms, the

economy, legislation)

ACTIVITIES

Mgt Directives designed to mitigate risk.

INFORMATION AND COMMUNICATION

Relevant quality information to support controls Policies and Procedures Manuals Training Sessions

MONITORING

Evaluate Internal Controls Are they working as designed? Role of the Auditor

LIMITATIONS

Human judgment - mistakes Management Override Collusion Extraordinary external events

APPLY COSO FRAMEWORK TO PURCHASING & ACCOUNTS PAYABLE

Group Exercise Identify Risk Identify activities designed to mitigate risk

QUESTIONS?

Thank you!