Sound financial management principles require that sufficient funds be retained by the library to provide a stable financial base at all times. Adequate levels of fund balance are essential to protect against reducing service levels because of temporary revenue shortfalls or unanticipated expenditures and limit impacts to local jurisdictions. Fund balance is also crucial in long-term financial planning.
The library shall report annually on the total unspent funds at fiscal year end and may retain such funds, from whatever source, and use them for any purpose deemed appropriate by the Board in the best interest of the library. Nonrecurring savings are encouraged to be used for nonrecurring expenses and capital outlay (such as library vehicles and data center replacements).
The Fund Balance is available to meet the library’s needs beyond those funded annually by the localities and other sources. The board of trustees authorizes ethical and fiscally responsible management of these resources to the library director.
- Components of Fund Balance
The following individual items shall constitute the Fund Balance.
- Nonspendable Fund Balance – Amounts that cannot be spent due to form (such as inventory or prepaid amounts) or are required to be maintained intact (such as corpus of permanent fund).
- Restricted Fund Balance – Amounts constrained for a specific purpose by their providers (such as grantors, external parties, or higher level of government) through constitutional provisions, or enabling legislation.
- Committed Fund Balance – Amounts constrained to specific purpose by the Library Board using its highest level of decision-making authority to be reported as committed, amounts cannot be used for any other purpose unless the library board takes the same highest level action to remove or change the constraint.
- The Board Designated Reserve: The amount of $500,000 of the Fund Balance will be reserved as contingency for a financial exigency, so as to minimize the financial impact to the localities and will be used only in the event of an emergency.
- Assigned Fund Balance – Amounts intended for a specific purpose by the library director, who has been given the delegated authority by the library board to assign amounts. The amount reported as assigned should not result in a deficit in unassigned fund balance.
- Unassigned Fund Balance – Positive amounts not classified as nonspendable, restricted, committed, or assigned and are available for any purpose.
When fund balance resources are available for a specific purpose in more than one classification, the more restrictive funds will be used first in the following order: restricted, committed, assigned and unassigned as they are needed.
- Funding Requirements of Committed Fund Balance
Board and State Aid Reserves – Amounts reserved by the board of trustees as contingency for financial exigency, so as to minimize the financial impact to the localities and will be used only in the event of an emergency. The recommended amounts to be reserved should be equal to a minimum 10% of the most recently approved total operating budget.
- Funding Requirements of Unassigned Fund Balance
- An unassigned fund balance shall be established at an amount equal to a minimum of 5% of the budgeted operating revenues as shown in the library’s most recent annual financial report.
- The use of the unassigned fund balance will be permitted to provide temporary funding of unforeseen emergency needs.
- If the unassigned fund balance falls below an amount equal to 5% of the General Fund operating revenues as outlined above, a plan to replenish the fund balance within twelve months will be presented to the library board.
- Unassigned fund balance represents the residual fund balance after the nonspendable, restricted, committed and assigned fund balance categories are deducted.
[Approved by WRL Board of Trustees December 2, 1998; Amended by WRL Board of Trustees February 26, 2003. Amended and approved by WRL Board of Trustees March 28, 2007. Reaffirmed by WRL Board of Trustees September 24, 2008. Amended October 28, 2009. Approved as amended by WRL Board of Trustees April 25, 2012. Approved as amended February 24, 2016. Approved as amended by the WRL Board of Trustees January 23, 2019. Approved as amended by the WRL Board of Trustees September 28, 2022.]