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Fund Balance Policy
The Board of Trustees may modify, amend or supplement this policy, as it deems necessary and appropriate.
Purpose
Fund balance refers to the difference between assets and liabilities in governmental funds. The fund balance serves as a measure of the financial resources available to a government. The Fountaindale Public Library District Board of Trustees has approved a Fund Balance Policy that establishes a range at which the General Fund balance should be maintained.
This policy is established to provide financial stability, cash flow for operations, and the assurance that the District will be able to respond to emergencies with fiscal strength.
Definitions
The five categories of fund balance, as established by Governmental Accounting Standards Board Statement No. 54, are as follows:
- Nonspendable: Amounts that cannot be spent because they are not in spendable form (e.g., principle portion of permanent fund, inventory).
- Restricted: Amounts not available for expenditure due to external restrictions, including grant restrictions, laws, or regulations.
- Committed: Amounts that are designated for specific purposes by formal action of the Library Board. (The Library Board may reverse this action if it is later determined the funds are needed for another purpose.)
- Assigned: Amounts management (i.e. Executive Director) intends to use for specific purposes.
- Unassigned: Available expendable financial resources in the General Fund that is not the object of tentative management plan. Also represents deficit positions within funds other than the General Fund.
Unrestricted fund balance refers to the total amount of committed, assigned, and unassigned fund balances.
The District will spend the most restricted dollars before the less restricted, in the following order: restricted, committed, assigned, unassigned.
Level of Unrestricted Fund Balance
It is the goal of the Fountaindale Public Library District to maintain no less than three (3) and no more than ten (10) months of operating expenses in the General Fund. General Fund balances over the maximum at the end of the fiscal year may be transferred to the Special Reserve Fund through Board resolution.
The Special Reserve Fund is used for construction of a library, purchasing a site for erecting a library, building an addition to an existing library building, furnishing necessary equipment for a library building, acquiring library materials, acquiring electronic data storage and retrieval facilities in connection with either the purchase or construction of a new library building or the expansion of an existing library building and for emergency expenditures for the repair of an existing library building or its equipment. The Special Reserve Fund balance is evaluated when reviewing the District’s Strategic Plan and other relevant documents and is maintained at a level sufficient to support upcoming planned projects. No specific minimum or maximum balance is established for the Special Reserve Fund.
Restricted Fund Balances
Funds that are provided by a specific line item in the annual property tax levy are legally restricted to the purpose of that fund.
Monitoring Targets
The Executive Director in conjunction with the Fountaindale Public Library Board of Trustees will monitor revenue collections, expenditures, and availability of cash by reviewing monthly financial reports. The Executive Director shall advise the Board whenever revenue projections suggest that revenue will fall short of expectations, unexpected expenditures will exceed budget, or fund target(s) may not be met by the end of the fiscal year.
Fund balances may fall occasionally outside of the target ranges because of special projects, construction, emergencies, other extenuating circumstances, and/or levy restrictions.