MCTA Treasurer’s Manual

Table of Contents

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Forward

Contributer’s List

Chapter 1 - Municipal Finance: An Overview

Complexity of Local Government

Proposition 2½

Powers and Duties of Cities and Towns

The Legal Foundation of Municipal Finance

Municipal Powers and Duties

The Structure of City Government

Mayor and City Council

The Structure of Town Government

Selectmen (41:20-23C)

Town Meeting

Other Municipal Officers

Assessors

Collectors

City Auditors  /Town Accountants

Town Auditors

City and Town Clerks

Finance Committee

Districts

District Treasurers

Optional Forms of Municipal Administration

(Role of) Department Heads

Chapter 2 - Duties and Responsibilities of the Treasurer

Overview

Responsibilities of and Functions Carried Out by the Treasurer

Miscellaneous Statutory Provisions Applying to Treasurers

Term of Office: Elected

Term of Office: Appointed

Salary and Compensation

Removal from Office

Vacancy in Office

Liability of the Treasurer

Bonding of Treasurer

Assistant, Temporary, and District Treasurers, and Acting Collector-Treasurers

Assistant Treasurer

Treasurers Acting as Collector of Taxes

District Treasurer

Chapter 3 - Operations

Cash Receipt and Disbursement Records

Accounting Systems

The Cash Book

Cash Receipts

Disbursements

Vendor Warrants

Payroll Warrants

Special Warrants

Supporting Documentation for Cash Book

Classification Book or Worksheet

Required Reports: Reporting from the Cash Book

Bank Ledger (Master Check Register)

The Check Register

Investment Log

Preparing for an Audit

Internal Control Review

Substantive or Validation Tests

Procedures for Handling Unclaimed Checks

Exhibit: Sample Cash Book

Chapter 4 - Reconciliation

Reconciliation of Cash

Reconciliation Chronology

Reconciliation of Bank Statement

Utilizing a Reconciliation Worksheet

Preliminary Work for Preparing a Reconciliation Worksheet

Making Entries on the Reconciliation Worksheet

Reconciling the Worksheet

Reconciling the Cashbook to the Ledger

Unclaimed Checks

Record Retention

Sample Reconciliation Sheet

Chapter 5 - Tax Titles and Foreclosures

Tax Title Process

Maintaining Records on Tax Title Accounts

Redeeming a Tax Title with Installment Payments

Assignment of Tax Title

Bulk Assignments

Land Ownership Records

Foreclosures in the Land Court

When a Foreclosure Petition May Be Brought

Procuring Legal Assistance

Funding Tax Title Foreclosures

Petition to Foreclose

Filing at Land Court

Filing Fees

Land Court Examiner

Notification by the Land Court to Interested Parties

Filing an Appearance or Objection (60:68)

If Payment is Made

Partial Payments

If Payment is Not Made

Non-Contested Cases

The Issuing of a Foreclosure Decree

Redemption of Tax Titles Which Have Been Foreclosed

If the Request for Redemption is Denied

Recovery of Costs and Fees

Tax Possessions

Pro Rata/Pro Forma Taxes

Leasing of Tax Possession Property

Persons Not Eligible to Purchase Tax Possession Property

Foreclosure Procedures for Land of Low Value

Collection Procedures, Tax Titles and Foreclosures

Subdivision Rules and Regulations

Suspension, Denial or Revocation of Local Licenses and Permits

Intermunicipal Agreements

Assessment of Future Taxes by Bank or Mortgage Companies

Collection by Suit

Collection from Descendants Estates

Use of Credit Bureau

Deed(s) in Lieu of Foreclosure

Tax Title Collection Policies and Procedures

Policies

Procedures

Certification of Subsequent Taxes to Tax Title Accounts  (60:61)

Disputed Tax Title Accounts

Tax Title Redemption

Abatement of Tax Titles

Chapter 6 - Trust Funds, Grants and Other Special Funds

GIFTS AND TRUST FUNDS

Gifts to a Municipality

Distinguishing between Trust Funds and Gifts

A Municipality’s Authority to Hold Trust Funds

Defining Key Terms

The Doctrine of Cy Pres

Administration of Trust Funds

Board of Commissioners of Trust Funds

The Board of Selectmen as Trust Fund Commissioners

Role of the Treasurer

The Treasurer and the Trust Fund Commissioners

Cemetery Commissioners and Perpetual Care Funds

Library Trustees and Gifts to Libraries

Municipal Trust Funds when the Principal is not in the Custody of the Community

Investment of Trust Funds in the Custody of the Treasurer

Suggested Trust Fund Policies

Special Permanent Funds

Stabilization Fund

Pension Reserve Fund

Unemployment Compensation Fund

Scholarship Fund or Education Fund

Elderly and Disabled Taxation Fund

Law Enforcement Trust Fund

Other Special Permanent Funds

Accounting for Trust Funds

FEDERAL AND STATE GRANTS

Accounting for Grants

REVOLVING ACCOUNTS

Chapter 7 - Payroll

Responsibility/Overview

Enrolling a New Employee

New Employee Checklist

New Hire Reporting

Preparation of Payrolls

Deductions

Reconciliation of Payroll Deductions

Examples of Payroll Records to be Kept on File

Reporting and Payment Transmittal Requirements

Social Security, Medicare and Income Taxes

Child Support

Financial Institutions; Credit Unions

Making Payments Electronically or Manually

Deposit Schedule

When to Deposit Employment Taxes

Filing Requirements

State Tax Deposit Requirements for Employment Taxes

Miscellaneous Legal Requirements Information

COBRA

Covered Individual or Qualified Beneficiary

Qualifying Events

Notices under COBRA

Continued Coverage

Conversion Option

Premiums

HIPAA

TEFRA

Unemployment Compensation (151A: 14A)

Family and Medical Leave Act of 1993 (FMLA)

Reasons for Taking Leave

Advance Notice and Medical Certification

Unlawful Acts by Employers

Massachusetts Maternity Leave Act  (149:105D)

Fair Labor Standards Act  (29 USCA §§201-219)

Overtime and Record Keeping

Compensatory Time

FLSA Exemptions

Law Enforcement and Fire Protection Personnel under FLSA

Sexual Harassment

Personal Use of Municipally-Provided Vehicles

Non Personal-Use Vehicles

Calculating the Value of Personal Use a Municipally-Provided Vehicle

Payroll Appendix

Sexual Harassment: Policy and Procedure

Chapter 8 - Retirement System

Public Employee Retirement Administration Commission (PERAC)

Pension Reform Act of 1987

Tax Status of Pension Contributions

Early Intervention Plan

Municipal Retirement Systems

Municipal Retirement Boards

Funding the System [32:22]

Custody of Retirement Funds

Management of Retirement Funds

Investment of Retirement Funds

Treasurer Designated Custodian of Investments/Securities

Treasurer’s Duties when Custody of Investments Is Designated to Others

Procedures for Handling Pension Fund Receipts

Application for Membership in System

Contributions from Members of Municipal Retirement Systems

Pension Contribution Rates

Annuity Savings Fund

Municipal Pension Reserve Fund [40:5D]

County Pension Reserve Fund

Recording Cash Receipts of Retirement System Funds

Disbursements of Retirement System Funds

Handling Withholdings from Pensions

Recording Disbursements [840 CMR 4.01]

Cash Balances

Reconciliation to Bank Records

Compensation for Treasurer’s Duties

County and Regional Retirement Systems

County and Regional Retirement Boards and Advisory Councils

Contributions from Members of County or Regional Retirement Systems

Payroll Deductions for Employees Who Work for Multiple Units

Semiannual Payments to County or Regional System

The Treasurer’s Monthly Retirement Deduction Report

Symbols Designating Non-Members of the Retirement System

Teachers’ Retirement System

Teachers’ Retirement Board

Calculating Deductions

Report of Deductions

Chapter 9 - Borrowing

Introduction

Debt Limitations

Issuing Debt

Short-term Debt

Purposes for Short-term Borrowing

Revenue Anticipation Notes (RANs)

When and How Much to Borrow

Issues relating to Revenue Anticipation Borrowings

Grant Anticipation Notes (GANs)

State Aid Anticipation Notes (SAANs)

Federal Aid Anticipation Notes (FAANs)

When and How Much to Borrow

Bond Anticipation Notes (BANs)

Procedures for Short-term Borrowing

State House Notes

Issuance of Notes

Procedures for Long-term Borrowing

Introduction

Role of Bond Counsel

Structuring a Loan

Issuing Bonds or State House Serial Notes

Determining the Maturity Schedule

Deciding the Manner in Which the Loan Will be Awarded

Call Provisions

Bond Ratings

Credit Enhancements

Alternatives to Competitive Bidding

Requisite Actions before Proceeding with a Sale

The Offering Documents

Advertising the Sale

The Sale

Post-Sale Activities

Delivery of the Bonds

Debt Records & Activities

Refunding of Existing Debt

Qualified Bonds

State Distributions to Pay Debt Service

Emergency Finance Board

Emergency Board

State School Building Assistance

Water Pollution Abatement Trust

Municipal Securities Disclosure Requirements

Provisions Affecting Municipalities

Tax Reform

Arbitrage Rebate Exceptions

Effects of Tax Reform on Municipal Debt

Inside Debt Limit

Outside Debt Limit

Chapter 10 - Financing Capital Improvements

Overview

Capital Improvements Programs

Steps in Implementing a Capital Improvements Program

Role of the Treasurer—Identifying and Evaluating Financing Options

Debt Planning

Ability to Pay

Absorbing the Debt Service within the Operating Budget

Designated Revenues

Proposition 2 ½ Debt Exclusions

Managing Debt

Common Financing Options for Capital Improvement Projects

Summary of Short and Long-Term Options

Financing Capital Projects at the Best Interest Rate—How Bond Analysts Evaluate Municipalities

Chapter 11 - Effective Cash Management

Importance of Cash Management

The Goals of Cash Management

Elements of an Effective Cash Management Program

Bank Relations

Cash Flow Statements

Estimating Collection Receipts

Forecasting Disbursements

Analyzing Cash Flow and Preparing a Budget

Suggestions for Improving Cash Flow

Effectively Investing Available Cash

The Yield Curve

Types of Investments

Certificates of Deposit

U.S. Treasury Bills

Repurchase Agreement

Money Market Deposit Accounts (MMDAs)

Massachusetts Municipal Depository Trust

U.S. Government Agency Obligations

Secondary Markets

Mutual Fund Money Market Accounts

Investment-Related Matters

Conclusion

Typical Receipts and Disbursements

I. Receipts

II. Disbursements

Chapter 12 - Procuring Banking Services

Introduction

Importance of Staying Current with Advances in Banking Services

How Banks Can Help Improve Municipal Cash Management

Table 1

Collection Services

Account Services

Types of Accounts Available and Account Purposes

Maximization of Information on Accounts

Maximization of Efficiency between Accounts

Investment Services

Advisory and Management Services

Bank Investment Products

Market-Based Investment Products

Credit Services

Short-term Notes

Long-term Borrowing

Procuring Banking Services

Long-Term Borrowing Services

Banks outside the Community

Steps in the Competitive Bidding Process

Evaluating Relationship with Depository Bank

Computing the Cost of Banking Services

Compensating Balances

Appendix