Local Finance Notice 2023-07 Proposed Readoption of N.J.A.C. 5:30 with Amendments & New Rules
This Local Finance Notice highlights key updates and substantive changes proposed by the Board; however, officials should read the entirety of the Notice of Proposed Chapter Readoption for a complete description of all proposed amendments and new rules. While some proposed updates are codifications of existing guidance and policies, the Board is proposing several significant changes that warrant close attention.
Proposed Amendments and New Rules
- The Board proposes readopting Subchapters 1, 5, 9, 9A, 11, 15, 16, and 17 without change, and amending Subchapters 2, 3, 4, 6, 8, 12, and 18 to apply to joint meetings (now known as regional service agencies), and to municipalities and fire districts.
- Subchapter 3 would codify guidance in Local Finance Notice 2017-25 pertaining to the county entity budget request cap, and would also amend N.J.A.C. 5:30-3.2 to prohibit municipalities from adopting their annual budget unless they have submitted a user-friendly budget section corresponding with their previous year’s adopted budget.
- The bill would amend N.J.A.C. 5:30-3.8 to require municipalities to submit to the Division a user-friendly budget section corresponding with the introduced budget, and to require municipalities to list accumulated absence liability for each individual position, regardless of whether part of a collective bargaining unit. New rule N.J.A.C. 5:30-3.12 requires municipalities to provide the Division with a copy of the resolution and/or ordinance authorizing the sale or long-term lease of their water, sewer, or other municipally-owned public utility services to another entity, within five days of final adoption.
- Subchapter 4 would implement certain provisions of the Water Quality Accountability Act by requiring municipalities to prepare and adopt a capital budget and capital program annually, which would need to identify water infrastructure improvements. Subchapter 5 would delete language permitting municipalities and counties to sequentially number purchases charged to non-salary line items through pre-printed multiple copy purchase orders, and would require local authorities and fire districts that do not maintain an encumbrance accounting system to maintain a record of all open contracts.
- Subchapter 6 applies to joint meetings the accounting and auditing requirements applicable to municipalities and counties.
- The bill would update references to the federal OMB Circular A-133 and the state’s OMB Circular, codify the current process for submitting an audit to the Division, and codify the process for notifying the Division of fraud or illegal acts.
- Subchapter 8 would update regulations concerning surety bond coverage provisions to: require municipalities to submit a user-friendly budget corresponding with their previous year’s adopted budget, require municipalities to have a temporary municipal finance officer, and require municipalities to sell their water or sewer system.
- The bill would establish mandatory surety bonds for chief financial officers, amend the exposure index for chief financial officers and tax collectors, and implement annual reporting for long-term PILOTs separate from the municipal user-friendly budget.
- Subchapter 9 would make various updates to reflect Section 9 of P.L. 2020, c. 34, which amended the Government Electronic Payment Acceptance Act to permit local units to accept online funds transfers and in-person funds transfers.
- Subchapter 9A of N.J.A.C. 5:30-9A.6 would clarify the relationship between this provision and N.J.S.A. 40A:5-16.b, and would further clarify that advance payment is not authorized.
- Subchapter 10 would define a “default” on municipal debt obligations as failure to pay for whatever reason, and would further define the Director’s authority to order a municipality under State Supervision to authorize or make disbursements.
- The bill would codify the authority granted to a fiscal control officer appointed by the Board to oversee a municipality under State Supervision, and the procedures for terminating a fiscal control officer. It would also update the statute pertaining to accumulated absence liability. New rule would require documentation of an employee’s hire date and accrued absence time before compensation could be paid out to an employee. The auditor would undertake sample testing of the local unit’s compensated absence liability, if any.
- Confirm that the dollar value of compensated absence recorded for the employee is authorized by a labor contract, individual employment agreement, or ordinance or resolution. o
- Subchapter 16 would require business administrators, municipal managers, county administrators and managers, qualified purchasing agents and certified public works managers to register with GovConnect, and subchapter 17 would update the statutes to reference the latest auditing attestation standard
Conclusion
The proposed updates to Chapter 30 are meant to enhance fiscal oversight while providing greater clarity to local units. Local officials are strongly encouraged to review the entirety of the proposed changes and submit comments if desired.
Local Finance Notice 2023-07
Please follow the link below to read more about these items and guidance on how your local unit can implement them: https://www.nj.gov/dca/divisions/dlgs/lfns/23/2023-07.pdf
Contact Wielkotz & Company, LLC Today
For further information on Local Finance Notice 2023-07 and its implementation feel free to reach out to Steven Wielkotz at (973)-835-7900 ext. 201 or sdw@w-cpa.com