January 24, 2011
Re: Local Finance Notice on 2011/2012 Budget Matters
The Division of Local Government Services has recently released Local Finance Notice 2011-4 on CY 2011 and SFY 2012 Budget Development Matters.
There are several important topics covered in this recent notice. First, Transitional Aid applications will be available by early February and will be due, along with the Annual Financial Statement, Annual Debt Statement and the introduced budget that includes an anticipated levy cap referendum, by March 11th. Transitional Aid applicants are required to anticipate a possible budget referendum in the event their application is denied or in the determination of local officials, that the aid allocation is insufficient and a referendum is warranted.
Group 1 budgets will be examined by the Division for CY 2011. Budget groups 2 and 3 are eligible for local examination. If a governing body that is eligible for local examination wants the Division to examine their budget, they must pass a resolution prior to the introduction of the budget requesting the review.
The Levy Cap Workbooks have been completed and are available on the Division’s website. The workbook has been updated to reflect the new 2% levy law and new pages have been added to show calculations for capital spending and LOSAP exclusions. A new tab has been created for municipalities that receive shared services and are taking advantage of the exclusions for increases in pension, health benefits or capital/debt services increases related to share service agreements.
Municipalities are eligible to have the December blizzard emergency expenses treated as levy cap exclusions upon review of certificates to the Division. Only the portions of costs that exceed the cost of removing snow under non-emergency conditions will be granted for CY 2011 levy cap exclusions.
In regards to the Health Insurance Contributions and Waivers, the Division has made the following determinations:
- employee health care contributions shall be treated as a payroll agency transaction;
- employee contributions shall not be credited as a reimbursement to the health insurance appropriation, nor shall contributions be treated as Miscellaneous Revenue Not Anticipated;
- no employee contributions shall be treated as anticipated revenue in a local unit’s budget; and,
- budgeted appropriations for health insurance shall be net of revenue.
To disclose the value of employee contributions and reduced employer costs for health care coverage to the public, each formal Budget Message shall contain information or a schedule showing the amounts contributed from employees, the employer share, and total costs. The disclosure may be broken down by employee group. As an option, the local unit may include the value of estimates of future appropriation reductions as those employees currently under contracts begin making contributions when those contracts expire.
Further, effective with CY 2011 budgets, amounts appropriated for employees who receive payments in lieu of accepting health benefits (“waivers”) must be appropriated as a separate line item. The new line item must immediately follow the Health Insurance line item, named as “Health Benefit Waiver” with FCOA Code #23-221.
The Division will participate in two upcoming League “Budget Update” seminars on March 4th and March 8th. For more information on these seminars please contact Danielle Holland at firstname.lastname@example.org or 609-695-3481 x118.
If you have any questions on the Division’s notice, please contact Marc Pfeiffer, Deputy Director at 609-292-4584.
Very truly yours,
William G. Dressel, Jr.