1. New Jersey OCBOA
ITS NOT GAAP

2. Cash is King
Our system is designed to ensure cash is available to meet debt obligations
Around since the Great Depression and largely unchanged
This system has protected bond owners for over 80 years

3. Budget Drives Finances
The State limits “bad practices”
You may not anticipate more in a revenue than was collected in cash in the prior year
Pension payment must be made in full
Debt Service must be fully budgeted
The use of Fund Balance is restricted to Cash
State approves the budget

4. Material departures from GAAP
All receivables are 100% reserved – in GAAP terms a 100% allowance for doubtful accounts
Even transactions between funds even when the cash exists!
Excess budget funds sit in a reserve for one more year – just in case (Appropriation Reserves)

5. Material Departure from GAAP
We are not allowed to reserve for lifetime health benefits – not all towns participate
Accumulated time is just a disclosure its not expensed
No Depreciation

6. Municipal Utilities
Follow the same rules – except interest is accrued

7. Capital 5% down payment on new ordinances
Except self liquating utilities
Term of bond can not be longer than the useful life of underlying assets
Bond payments are included in the budget
Acts like depreciation

8. Pension Situation Local units have made all of their ARCs for years
Our portion of the pension is well funded liquid and available to meet the needs of retirees
State of New Jersey continues to look for ways to have the Counties, Municipalities, Schools, Authorities, etc., bail them out of the situation that they have created

9. You Called it What? Deferred Charges to Future Taxation
Deficit in Operations
Emergencies
Over-expenditure of an Appropriation
Accounts receivable for future budgets to fund through taxes
Consider making a negative adjustment to Fund Balance

10. You Called it What? Reserves Spending Reserves (Cash Liabilities)
Tax Appeals
Accumulated Absences
Non Spending Reserves
Reserve for Receivables

11. You Called it What? Accounts Receivable: Taxes Receivable
Fully Reserved
State of New Jersey
Not Reserved
Interfunds:
Requirement to negatively impact Fund Balance by establishing a Reserve

12. It’s Not Straight Forward
OCBOA to GAAP
It’s Not Straight Forward

13. Decoding New Jersey Municipal Accounting1
Understating Fund Balance (Surplus)
Under reporting assets
Over reporting liabilities
4 Step Method:
Receivables
Appropriation Reserves
Deferred Charges
Other Reserves
1Moody's Investors Service, Sector In-Depth, March 25, 2015, Decoding New Jersey Municipal Accounting

14. OCBOA to GAAP
Making the Move
2 Counties & 2 Towns

15. Haddonfield Fund Balance (Original) 6,170,144 Reserve for Receivables
1,042,144
Appropriation Reserves (31%)
379,214
Other Reserves
7,930,160
Fund Balance (Revised)
15,521,662
2018 Budget
18,289,411
Fund Balance as % of Budget
85%
Note: The Proceeds from the Sale of the Utility are statutorily required to
be used for payment of Debt Service. Removing this from the
Revised Fund Balance would then reduce the % to 45%

16. Haddonfield Deferred School Taxes Reserve for Sale of Utility
Should be reflected as a Restricted Fund Balance

17. Morris County Fund Balance (Original) 52,736,663
Reserve for Receivables
2,877,716
Appropriation Reserves (31%)
12,130,239
Other Reserves
7,000,000
Fund Balance (Revised)
74,744,618
2018 Budget
305,823,695
Fund Balance as % of Budget
24%
Note: The County maintains reserves in various other Funds totaling
$24 million. (General Capital Fund Balance, Motor Vehicle Fines,
Accumulated Absence Trust, Snow Reserve). Adding these would
move the % to over 32%

18. Morris County Statement of Operations
Fund Balance (Original)
52,736,663
Misc Revenues Anticipated (Rev Accts Rec’l, Rev Fund)
694,712
Receipts from Current Taxes
583,004
Interfunds Returned
1,600,000
Budget Appropriations
19,130,239
Fund Balance (Revised)
74,744,618

19. Morris County
Solar
Municipal Court Complex

20. Mercer County Fund Balance (Original) 26,134,472
Reserve for Receivables
6,655,398
Appropriation Reserves (31%)
10,321,323
Other Reserves
953,306
Fund Balance (Revised)
44,064,499
2018 Budget
328,924,222
Fund Balance as % of Budget
13%
Note: If you remove the grants from the budget total, then the %
becomes 14%.

21. Mercer County
Open Space Reserves

22. Wharton Fund Balance (Original) 2,375,471 Reserve for Receivables
262,800
Appropriation Reserves (31%)
815,583
Other Reserves
2,491,304
Fund Balance (Revised)
5,945,157
2018 Budget
9,635,674
Fund Balance as % of Budget
62%
Note: The Borough maintains reserves in various other Funds totaling
$771k. Capital Fund Balance, Accumulated Absence Trust, Snow
Reserve, etc. Adding these would move the % to almost 70%.
This does not take into consideration the Utility Fund Balances.

23. Wharton Utilized $2,127,294 of Cash Fund Balance in the 2018 Budget
The Fully Funded Capital Program makes up 19% of the Total Budget

24. Statement of Operations
Audit Schedule A-1
AFS Sheet 19
Historical approach to predicting the future regeneration of Fund Balance

25. Questions ?