CME Municipal Finance & Contract Administration Flashcards
6 cards from real CME practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CME Municipal Finance & Contract Administration flashcards as text
What is the primary purpose of a municipal capital improvement program (CIP)?
Answer: Plan and schedule major infrastructure investments over a multi-year period with identified funding sources
A CIP is a multi-year (typically 5–6 year) financial planning document that identifies, prioritizes, and schedules capital projects with their funding sources.
What is a general obligation (GO) bond in municipal finance?
Answer: A debt instrument backed by the full faith, credit, and taxing power of the issuing municipality
GO bonds are backed by the municipality's unrestricted taxing authority and full faith and credit, making them lower-risk and typically carrying lower interest rates than revenue bonds.
What distinguishes a revenue bond from a general obligation bond?
Answer: Revenue bonds are repaid solely from revenues generated by the specific project or utility they finance
Revenue bonds, such as water/sewer or toll road bonds, are secured only by the revenues from the funded project, not by general taxpayer funds.
What is the Davis-Bacon Act's requirement for federally funded municipal construction projects?
Answer: Requires payment of locally prevailing wages and fringe benefits to workers on covered projects
The Davis-Bacon Act requires contractors and subcontractors on federally funded construction contracts over $2,000 to pay workers the locally prevailing wage and fringe benefit rates.
What is the purpose of a bid bond in public construction procurement?
Answer: Provide financial assurance that a bidder will enter into the contract and furnish required performance bonds if awarded
A bid bond protects the municipality by ensuring that a bidder won't withdraw after winning the bid; if they do, the bond covers the difference in cost to award to the next bidder.
Under most state competitive bidding laws for public construction, what must a municipality award the contract based on?
Answer: The lowest responsive and responsible bidder
Public construction bid laws typically require award to the lowest responsive (meeting specs) and responsible (capable) bidder to ensure taxpayer value and prevent favoritism.