Current through Register Vol. 56, No. 18, September 16, 2024
(a) When a vacancy occurs in the office of
chief financial officer following the appointment of a certified municipal
finance officer to that office, the municipality's governing body or chief
executive officer, as appropriate to the form of government, may appoint, for a
period not to exceed one year commencing from the date of the vacancy, a person
who does not possess a municipal finance officer certificate to serve as a
temporary chief financial officer. With approval of the Director pursuant to
(a)2 and 3 below, the municipality may appoint or reappoint a temporary chief
financial officer for up to two additional one-year terms following the end of
the first temporary appointment. No municipality shall employ a temporary chief
financial officer for more than three consecutive years.
1. Prior to the end of the first-year
appointment of a temporary chief financial officer, the governing body, or
chief executive officer, as appropriate, shall request, in writing, permission
from the Director to appoint or reappoint a temporary chief financial officer
for a second consecutive one-year term. A questionnaire approved by the
Director shall be completed and included with the written request. A request
for Director approval of a third one-year term shall follow the same procedure.
The completed questionnaire and any documents submitted in support of said
questionnaire shall be exempt from disclosure under the Open Public Records
Act,
N.J.S.A.
47:1A-1 et seq.
2. Before granting approval to appoint or
reappoint a temporary chief financial officer for a second or third consecutive
one-year term, the Director shall be satisfied that the individual is of good
moral character and can satisfactorily fulfill the duties of a chief financial
officer. Any request to the Director shall provide the following information:
i. The candidate's efforts to obtain a
municipal finance officer certificate;
ii. Whether, as a condition of hiring, the
municipality performed a criminal background check, credit check, and judgment
search, along with the results thereof. For requests to reappoint the same
individual to another one-year term, any updates to such information shall be
disclosed;
iii. An explanation of
any repeat comments on the most recent annual audit that are attributable to
the office of chief financial officer; and
iv. An explanation of any complaints against
the office of chief financial officer from a member of the public, or other
persons, that are of a serious nature, such as those involving potential,
ongoing, or prior litigation.
3. The Director may request from the
municipality's governing body or chief executive officer, as appropriate, such
other information as may be necessary to determine the individual's good moral
character and ability to fulfill the duties of a chief financial
officer.
(b) When a
vacancy occurs in the office of chief financial officer following the
appointment of a certified municipal finance officer to that office, the
municipality's governing body or chief executive officer, as appropriate to the
form of government, may, in lieu of appointing a temporary municipal finance
officer, appoint a private entity to perform the duties of a chief financial
officer.
1. No private entity may fulfill the
duties of a chief financial officer for more than two consecutive one-year
terms. The professional services exception to public bidding set forth in
N.J.S.A. 40A:11-5(1)(a)(i)
shall apply to contracts with private
entities to fulfill the duties of chief financial officer. Notwithstanding any
law to the contrary, no contract to fulfill the duties of a chief financial
officer shall have a duration of greater than one year.
2. Any work performed by the private entity
on behalf of the municipality shall be supervised by at least one employee who
is currently licensed by the Division of Local Government Services as a
municipal finance officer. Any documents requiring the signature of the chief
financial officer of the municipality shall be executed by an employee of the
private entity holding a municipal finance officer certificate.
3. A municipality shall not appoint or
reappoint a private entity to fulfill the duties of a chief financial officer
without first making a written request to the Director for approval. Any
contract with a private entity shall be conditioned upon Director approval.
Before granting approval, the municipality must demonstrate a good faith effort
to hire as chief financial officer an individual holding a municipal finance
officer certificate issued pursuant to the provisions of
N.J.S.A. 40A:9-140.1
et seq. The Director shall also be satisfied that the private entity can
fulfill the duties of a chief financial officer. Any request to the Director
shall provide, at minimum, information concerning:
i. The municipality's efforts to hire a
certified municipal finance officer, including, but not limited to, advertising
and interviewing for the position. The municipality shall provide the salary
range for the position, a list of all candidates submitting resumes, and an
explanation of the hiring and interview process;
ii. The private entity selected by the
municipality, including the name and business address of all owners of any
percentage interest;
iii. The name
and license number of each certified municipal finance officer on the private
entity's staff, all licenses and certifications held by same, their experience
in municipal finance, and details concerning disciplinary proceedings and
actions to which they may have been subject, whether by the Division of Local
Government Services or any other administrative or licensing body;
iv. Whether any staff members who will be
fulfilling the duties of chief financial officer have criminal records, or have
any pending criminal or civil matters;
v. The results of any credit check or
judgment search performed with respect to any staff members who will be
fulfilling the duties of chief financial officer;
vi. Names of all other municipalities, if
any, in the State with which the private entity has contracted to temporarily
perform the duties of a chief municipal finance officer;
vii. Disclosure of any known or potential
conflicts of interest under the Local Government Ethics Law,
N.J.S.A. 40A:9-22.1
et seq., on the part of the private entity; and
viii. For municipalities seeking approval to
reappoint a private entity to a second consecutive one-year term, an
explanation shall also be provided of any:
(1) Repeat comments on the most recent annual
audit, attributable to the office of chief financial officer; and
(2) Complaints against the office of chief
financial officer from a member of the public or other persons that are of a
serious nature, such as those involving potential, ongoing, or prior
litigation.
4. The Director may request from the
municipality's governing body or chief executive officer, as appropriate, such
other information as may be necessary to determine the private entity's ability
to fulfill the duties of a chief financial officer.
5. The written request to approve a private
entity to temporarily fulfill the duties of a chief municipal finance officer,
and any documents submitted in support of said request, shall be exempt from
disclosure under the Open Public Records Act,
N.J.S.A.
47:1A-1 et seq.
6. All contracts between a municipality and a
private entity shall contain the following:
i. Adequate provisions to indemnify the
municipality against any losses incurred as a result of the actions or
inactions of the private entity;
ii. A requirement that the private entity be
responsible for the errors and omissions of its employees or agents, including
penalties, fines, interest, and damages;
iii. A requirement that the private entity
maintain adequate general liability, automobile, and worker's compensation
insurance if applicable, as well as maintain adequate insurance to cover such
losses as may arise as a result of errors, omissions, failure to perform, or
dishonesty in an amount at least equal to the recommended calculation for chief
financial officer surety bond coverage pursuant to
N.J.A.C.
5:30-8.2;
iv. A requirement that the private entity
have a written complaint procedure in existence. At a minimum, the complaint
procedure shall require that a complaint log be maintained, which shall be
available to the municipality for inspection;
v. A provision that all disputes between the
parties and disputes concerning the contract or its operation shall be in
writing and forwarded to the other party via registered mail. All contracts
shall have appropriate provisions for:
(1)
Dispute resolution between the parties;
(2) The service of process to the private
entity in New Jersey;
(3)
Application of New Jersey law; and
(4) Termination of the contract, including,
but not limited to, termination for failure to perform on the part of the
private entity, and a provision allowing termination of the private entity's
appointment if a certified municipal finance officer commences employment with
the municipality before the expiration of the private entity's one-year
term;
vi. If a dispute
over contract compliance, performance, or termination cannot be resolved by the
municipality and the private entity pursuant to the procedures set forth in the
contract, either party to the contract may file with the Superior Court that
has appropriate jurisdiction; and
vii. Copies of notices, memoranda,
complaints, or other correspondence received by the private entity regarding
municipal accounts shall be forwarded to the municipality within 48 hours of
receipt.
7. The private
entity shall have a New Jersey office.
8. All contracts entered into between
municipalities and private entities to fulfill the duties of chief financial
officer shall be in writing and executed by all parties.
9. A private entity performing the duties of
a temporary chief municipal finance officer shall make best efforts to adhere
to the following cybersecurity best practice framework:
i. Any system utilized by the private entity
shall:
(1) Be hosted on dedicated servers or
in a FedRAMP Moderate Impact Level Authorized Cloud;
(2) Encrypt stored and transmitted financial
information and personal identification information;
(3) Maintain only critical personal
identification information;
(4)
Employ a resilient password policy;
(5) Undergo regular and stress
testing;
(6) Ensure regular
security updates on all software and devices are being carried out;
(7) Have back-up plans, information disposal,
and disaster recovery procedures created and tested;
(8) Undergo regular security risk assessments
for detecting compromises, along with regular monitoring for vulnerabilities,
with necessary patches and updates being implemented;
(9) Have a Cybersecurity Incident Response
Plan developed; and
(10) The
private entity shall:
(A) Check provider
credentials and contracts when using cloud services;
(B) Educate staff in good security measures
and perform employee background checks; and
(C) Create a Computer Security Incident
Response Team, generally called a CSIRT.
10. The municipality shall be
responsible for establishing appropriate security and access control protocols
with respect to the private entity's access to and use of the municipality's
systems.
(c) When a
vacancy occurs in the office of chief financial officer resulting from the
departure of a temporary chief financial officer, the municipality's governing
body or chief executive officer, as appropriate to the form of government, may,
pursuant to (b) above, apply for Director approval to appoint a private entity
to perform the duties of a chief financial officer.
1. If a temporary chief financial officer is
not appointed or reappointed in the year next following the initial appointment
of a temporary chief financial officer, a private entity may not perform the
duties of a chief financial officer for more than two consecutive one-year
terms, after which the municipality must appoint a licensed municipal finance
officer or share a chief financial officer with another municipality or
municipalities under a shared services agreement entered into pursuant to
N.J.S.A. 40A:65-1 et
seq.
2. If a temporary chief
financial officer is not appointed or reappointed in the second year after the
initial appointment of a temporary chief financial officer, a private entity
may not perform the duties of a chief financial officer for more than a single
one-year term, after which the municipality must appoint a licensed municipal
finance officer or share a chief financial officer with another municipality or
municipalities under a shared services agreement entered into pursuant to the
provisions at
N.J.S.A. 40A:65-1 et
seq.
(d) All private
entity officers and employees temporarily fulfilling the duties of chief
municipal finance officer on behalf of a municipality shall be subject to the
Local Government Ethics Law,
N.J.S.A. 40A:9-22.1
et seq. Prior to the municipality seeking Director approval to contract with
the private entity, the private entity shall disclose to the municipality any
known or potential conflicts of interest arising under the Local Government
Ethics Law. The private entity's disclosure obligation shall continue through
the term of the contract. Any individual holding a chief municipal finance
officer certificate that is supervising the temporary fulfillment of chief
financial officer duties for a municipality shall be considered a "chief
financial officer" pursuant to
N.J.A.C.
5:35-2.1, and, thus, would be required to
complete and submit an annual financial disclosure statement pursuant to
N.J.S.A.
40A:9-22.3.
(e) Another officer of the municipality, such
as the municipality's chief administrative officer, shall be designated by the
governing body to authorize and monitor any transfer of funds to the private
entity.
(f) If a private entity is
fulfilling the duties of a chief financial officer, even if an individual
holding a chief municipal finance officer certificate is appointed by a
municipality as a chief financial officer at nominal salary while affiliated
with the private entity, the private entity shall be considered to be
temporarily fulfilling the duties of a chief municipal finance officer, with
that individual and the private entity being subject to the provisions of this
section.
