GFOA ANNUAL CONFERENCE

1. County Fiscal Affairs Session – County CAP’s September 18, 2014 Gerry Seneski, Chief Financial Officer, The County of Cumberland Dave Miller, Chief Financial Officer, The County of Mercer Joe Kovalcik, Chief Financial Officer, The County of Morris GFOA ANNUAL CONFERENCE

2. 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 County CAPS

3. 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 Impact on ratings

4. 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 Sources of additional cap room

5. 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!!!!!!!!!!!!!!!!!!!!!!!!!!!! Planning is key

6. 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 Are cap exceptions really exceptions

7. 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 Legislative relief

8. County Fiscal Affairs Session – County Finances September 18, 2014 Gerry Seneski, Chief Financial Officer, The County of Cumberland Dave Miller, Chief Financial Officer, The County of Mercer Joe Kovalcik, Chief Financial Officer, The County of Morris GFOA ANNUAL CONFERENCE

9. 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

10. 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

11. 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

12. 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

13. Rating Agencies • Planning, Planning and more planning • Fund Balance Projections • Future year budget projections • Policies – Fund Balance and Debt • Succession Planning County finances

14. 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? County finances

15. County Fiscal Affairs Session – Internal Control September 18, 2014 Gerry Seneski CPA, RMA, CCFO, CMFO Chief Financial Officer The County of Cumberland GFOA ANNUAL CONFERENCE

16. 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 Coso

17. 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? What is internal control?

18. 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. objectives

19. Environment Risk Assessment Activities Information and Communication Monitoring Internal Control Components

20. 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. Environment

21. 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) Risk assessment

22. Mgt Directives designed to mitigate risk. Activities

23. Relevant quality information to support controls • Policies and Procedures Manuals • Training Sessions Information and communication

24. Evaluate Internal Controls • Are they working as designed? • Role of the Auditor Monitoring

25. Human judgment - mistakes Management Override Collusion Extraordinary external events Limitations

26. Group Exercise • Identify Risk • Identify activities designed to mitigate risk Apply coso framework to Purchasing & Accounts payable

27. Thank you! Questions?