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

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

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

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

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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

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

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

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

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

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

12.  Cash Flow Items –  Still very low interest earnings  Change in how our County Aid Funds being received in 2015  Reimbursements from your grants

13.  Rating Agencies  Planning, Planning and more planning  Fund Balance Projections  Future year budget projections  Policies – Fund Balance and Debt  Succession Planning

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?

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

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

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?

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.

19.  Environment  Risk Assessment  Activities  Information and Communication  Monitoring

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.

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)

22.  Mgt Directives designed to mitigate risk.

23.  Relevant quality information to support controls  Policies and Procedures Manuals  Training Sessions

24.  Evaluate Internal Controls  Are they working as designed?  Role of the Auditor

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

26.  Group Exercise  Identify Risk  Identify activities designed to mitigate risk

27.  Thank you!