New Jersey Administrative Code
Title 5 - COMMUNITY AFFAIRS
Chapter 30 - LOCAL FINANCE BOARD
Subchapter 5 - CERTIFICATIONS OF AVAILABILITY OF FUNDS, AND ACCOUNTING SYSTEM REQUIREMENTS FOR LOCAL UNITS
Section 5:30-5.5 - Methods of accounting for and certifying available funds for special situations

Universal Citation: NJ Admin Code 5:30-5.5

Current through Register Vol. 56, No. 18, September 16, 2024

(a) Temporary budget: When a local unit is operating under a temporary budget, as provided for in N.J.S.A. 40A:4-19, the local unit may enter into a contract for a period extending beyond the time period funded in the temporary budget upon compliance with the following:

1. If the full cost of that year is to be charged against the temporary budget at the time the contract is authorized by a resolution or ordinance of the governing body, the written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of the full cost of the contract for that fiscal year in the temporary budget, which must contain sufficient appropriations therefor; or

2. If the full cost of that year would not be charged against the temporary budget at the time the contract is authorized by a resolution or ordinance of the governing body, the written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of at least a prorated amount reflecting all liability to be incurred during the temporary budget period, and the contract must contain a clause making its continuation past the temporary budget period subject to the appropriation of sufficient funds. Immediately after the final budget is adopted, a written certification of available funds shall be prepared for the remaining balance and filed with the original ordinance or resolution authorizing entering into the contract.

(b) Open-end contracts: When a contract provides for certain goods or services to be provided upon request, up to an established maximum, and the local unit is not obligated to order, accept, or pay for said goods or services, except when it orders them, the local unit may enter into the contract upon compliance with the following:

1. If the full amount of the contract is to be charged against the budget at the time the contract is awarded by the governing body, the written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of the full amount of the contract; or

2. If the full amount of the contract would not be charged against the budget at the time the contract is awarded by the governing body, no amount shall be encumbered until such time as goods or services are ordered, pursuant to the open-end contract. When this option is utilized, the budgetary accounting encumbrance process set forth at N.J.A.C. 5:30-5.3(c) and 5.4(b) shall take the place of, and be used instead of, the written certification of available funds set forth at N.J.A.C. 5:30-5.4(a). If a local unit subject to the Local Authorities Fiscal Control Law (N.J.S.A. 40A:5A-1 et seq.) does not maintain an encumbrance system, the record of open contracts maintained pursuant to N.J.A.C. 5:30-5.3(d) shall be updated to reflect any purchases made pursuant to the open-end contract.

(c) Contracts up to 12 months not coinciding with fiscal year: When a contract has a term of up to 12 months that does not coincide with the established fiscal year of the local unit, the local unit may enter into the contract upon compliance with the following:

1. If the contract is for a professional service or is for a single undertaking or project with one basic object (such as, but not limited to, contracts for revaluation, codification, management studies, and feasibility surveys), rather than being divisible into separate steps or actions, which in themselves are independently acceptable as complete work products, then the full amount of the contract shall be charged against the budget and/or appropriation from a source other than the budget at the time the contract is authorized by the governing body and the written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of the full amount of the contract. This method may also, at the option of the local unit, be followed for contracts described in (c)2 below.

2. If the contract is not for a professional service or for a single undertaking or project with one basic object and it provides for goods or services to be provided at separate intervals over the contract period, then the contract shall be charged against the budgets in the two consecutive fiscal years as follows: at the time the contract is awarded by the governing body (for the amount to be incurred during the first fiscal year) and at the time of the adoption of the temporary budget and the adoption of the final budget (for the remaining amount of the contract for the second fiscal year). The written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of the prorated amount reflecting the liability to be incurred during the first fiscal year and a second written certification of available funds shall certify the availability of the remaining amount to be incurred during the second fiscal year.

(d) Multi-year contract requirements when a contract has a term of more than 12 months, the local unit may enter into the contract upon compliance with the following:

1. If the contract is pursuant to N.J.S.A. 40A:11-15:
i. If the contract is for construction and related services authorized by N.J.S.A. 40A:11-15(9), the full amount of the contract shall be charged against the budget and/or appropriation from a source other than the budget at the time the contract is awarded by the governing body and the written certification of available funds required by N.J.A.C. 5:30-5.4(a) shall certify the availability of the full amount of the contract;

ii. For all other contracts with a term of more than 12 months, an amount reflecting all liability to be incurred during the fiscal year shall be charged to the budget for each fiscal year covered by the term of the contract, subject to such requirements of this section as might apply with respect to temporary budgets, open-end contracts, or contracts not commencing at the beginning of the fiscal year. The written certification of available funds required by N.J.A.C. 5:30-5.4(a) for each fiscal year shall certify the availability of all funds to be charged to the budget for that fiscal year.

2. If the contract is for a multi-year lease or a contract that is not specifically exempted pursuant to N.J.S.A. 40A:11-15 or 40A:12-5(b), it shall contain a clause making the contract subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation or contain an annual cancellation clause permitting the local unit to unilaterally cancel the contract for the coming year.

(e) Advance award of contracts: No contract shall be awarded in one fiscal year if the date on which it properly takes effect falls in the next fiscal year unless the contract includes a provision making it subject to the availability and appropriation of sufficient funds in the year in which it takes effect.

(f) Payment from proceeds shall be as follows:

1. Under the circumstances when a contractual liability may be lawfully incurred and a payment may lawfully be made without an appropriation, such as for professional services for liquidation or foreclosure of tax title liens as provided by N.J.S.A. 40:50-6, the certification of available funds should recite that fact and cite the statute.

2. Contracts for services to be paid from savings generated by or from State or Federal aid funds not yet received and appropriated are not permitted unless an appropriation is made prior to the time the expenditure of funds is authorized.

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