Q.  Can a municipality go out seven (7) years on a Bond Anticipation Note (BAN)?

A.  Chapter 157, Laws of 2020 amended the NYS Local Finance Law by extending the ‘rollover’ period for BANs issued in calendar years 2015 – 2021 (inclusive) to up to seven (7) years beyond the original date of issue of the BAN.*    

 

Q.  Has Federal legislation been enacted which would provide more flexibility to local governments in their spending of American Rescue Plan Act (ARPA) funds?

A.  Although considered in the U.S. Congress, expanded purposes for spending ARPA funds has not been approved. According to several sources, this issue will likely not be taken up again in 2021 but may be reconsidered in 2022. 

 

Q.  Do any members from a county have insight on the processing of community college chargebacks?

A.  The following was posted by an NYGFOA member in the Association’s online Member Forum:   Community college chargebacks are part "tuition" part capital charge. The college bills the respective county  for both portions. This is based on a rate set by SUNY usually by 06/30 each year. This year, SUNY calculated a retro rate in August/September. The college receives the money and has to record the allocation of both portions. The county may pay the community college bill against one budget line in their budget and/or the county may charge back the respective municipality and then show a "net zero"  of expense against revenue (usually on a one-year lag.)

 

Q.  Is the maximum amount of FDIC insurance coverage for a municipality’s bank deposits determined by Tax ID number or by the number of official custodians for the entity?

A.  According to FDIC regulations (12 C.F.R. § 330.15), the governmental body itself is not treated as the insured depositor. Rather, the “official custodian” of the account is treated as the insured depositor.

Also, the “official custodian” of the account is treated as the insured depositor. If a public unit has multiple official custodians, the deposits of each official custodian are separately insured.

The official custodian is an officer, employee, or agent of a public unit who has plenary authority, including control, over funds owned by the public unit, which the official custodian is appointed or elected to serve. Control of public funds includes possession of, as well as the authority to establish, accounts in an Insured Depository Institution (IDI) and to make deposits, withdrawals, and disbursements.

One person may serve as official custodian of the deposits of more than one public unit. In addition, a public unit may have two or more official custodians, all of whom will have separate insurance coverage for the deposits in their control. To qualify for separate insurance coverage, however, each official custodian must have plenary authority, including control, over the deposits owned by the public unit.

Deposit insurance coverage cannot be increased by dividing funds among several putative official custodians who lack plenary authority over such funds. Similarly, coverage cannot be increased by dividing funds among several accounts controlled by the same official custodian for the same public unit. If the exercise of authority or control over the deposits of a public unit requires action by, or the consent of, two or more custodians, the FDIC would treat the two custodians acting together as one official custodian for the purpose of calculating deposit insurance coverage.

      

Q.  Will NYGFOA be putting out any information on what ARPA fund recipients can legally do with the funds? 

A.   The Association does not plan to issue a list as U.S Treasury guidance is very broad as to how the funds can be used.  Section 2 of the U.S. Treasury FAQ covers how the funds can be used:  https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf. As long as the funds are being used to address constituent needs and revenue losses related to the pandemic (and it is documented) you should not have a problem.

The U.S. Treasury guidance, however, is more specific on what you cannot use ARPA funds for such as:

  • “Deposits” into pension funds;
  • Legal settlements;
  • Premium pay for workers not deemed doing “essential work”;
  • Use as a non-federal match for federal funding;
  • Replenishing rainy day funds or financial reserves; and
  • Payment of principal or interest on outstanding debt, including short-term notes.

The Association is following efforts in the U.S. Congress to permit more flexibility in the use of ARPA funds. Although efforts to permit more flexibility in ARPA fund spending have stalled, at this writing, it appears the issue will be re-considered in the Congress in 2022.

 

Q.  Can local governments establish their own trust for Other Post-Employment Benefits (OPEB)?

A.  Outside of New York City (which established its own Retiree Health Benefits Trust) in 2006, our understanding is that unless there is express authorization in State statute to establish this vehicle (in this case an OPEB trust), it is not permitted. However, State statute does not expressly state an entity cannot do this. In the past, legislation supported by the State Comptroller would have established a State-run OPEB trust which the State and local governments could opt into (NYC’s plan would have been grandfathered). Funds would have been managed in a manner similar to how the State Retirement System manages its funds. This legislation, to our knowledge, was the closest the State came to addressing the OPEB trust issue.

 

*Please Note:  Legal cites in this column are not to be construed as legal advice or a legal opinion. Any legal questions should be directed to an attorney, legal department, or the Office of the State Comptroller.

Do you have a government finance related question or searching for a resource to help you in your job? Are you curious about the status of state or federal legislation affecting your government? If so, please contact Fred Shellard, Director of Professional Services at (518) 465-1512 or e-mail or at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Published in NYGFOA Winter 2021 Newsletter 

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