Transcript Library Finance and State Aid

Library Finance and State Aid

Presented by Victoria Rosch, Deputy
Director, Library Development Bureau, New
Jersey State Library

Presented May 9, 2009
The Board’s Financial Responsibilities



NJ library law gives boards of trustees responsibility
for the use of funds available for library purposes
(Municipal: N.J.S.A. 40:54-12; County:
N.J.S.A.40:33-8
Trustees are accountable for the use of funds
Trustees must comply with applicable laws and as
much as reasonable, with local customs
The Board’s Financial Responsibilities




Set Financial Policies
Develop, approve, monitor, and evaluate the
budget against performance
Oversee management of investments
Assure adequate funds for the provision of
library services; build good relationships with
elected officials and community; assure
money spent wisely; develop strategic plan
for service with staff and community input
Basic sources of library funds…






Local taxes and appropriations
State Aid
Fines, fees, gifts, bequests and fundraising
activities
Grants
Federal funds, such as the e-rate
Capital Funds
Local Financial Effort for Municipal
Libraries



Municipal/county expenditure generally comprises
the largest percent of income for the library
N.J.S.A. 40:54-8- the governing body shall annually
appropriate and raise by taxation a sum equal to
one-third of a mill on every dollar of assessable
property within such municipality based on the prior
year’s equalized valuation of such property
Increase to the library may be limited to 15% of the
previous year’s municipal expenditure to the library
One-third Mill Definitions


Equalized valuation is the true value of real property
within a local taxing district, computed from the
aggregate assessed valuation and actual sales of
property, and used to distribute equitably State
school and library aid, apportion county taxes, and
measure municipal debt limits
One-third mill is the equalized valuation times
.000333333
Sample Minimum Funding Calculation
For A New Jersey Municipal Public
Library




Prior year Equalized Valuation: $921,534,000
Multiplied by .000333333 (1/3 mill)
$307,178 is the minimum level of support
Most municipal libraries are above 1/3 of a
mill
More Samples of 1/3 Mill Calculation
BUDGET
EQ VAL
1/3 MILL
YEAR
PRIOR YR
2002
$534,653,525
$178,218
2003
$586,700,890
$195,567
2004
$684,943,295
$228,314*
* 16.74% increase in Eq Val so municipal expenditure
to library may be limited to 15% of prior year =
$224,902 (195,567 + 15%)
Sample- Mini Budget for NJ Public
Library




Amount of local support given = $500,000
Personnel costs - $325,000 (65%)
Materials (books, AV) 100,000 (20%)
Other expenditures (building, supplies,
continuing education, etc.) $75,000 (15%)
Budget Checklist for Board and
Director






Review prior year’s budget
Develop next year’s program and services
Anticipate revenues/ expenditures
Review draft budget
Revise as necessary
Board approves budget
Budget Checklist- Continued






Present to local officials
Director and board member/s attend budget hearing
to explain the budget and advocate for the library.
The municipality/county sets the appropriation.
Thank local officials
The library board adopts the budget
The library director implements the budget
Municipal/County Capital Budget




Appropriations in the municipality’s capital budget
are for items which have a five year life under the
Local Bond Law
Capital Improvements are financed by the issuance
of notes or bonds by the municipality under the
Bond Law
Capital improvements are not subject to the
municipality’s statutory spending limitation, but a
waiver is required for the tax levy cap
Municipal capital improvement expenditures are in
addition to the library’s statutory minimum
Expenditures






May be for any purpose related to providing library services (see
NJAC 15:21-12.5 (c) for details)
Follow appropriate laws and procedures
Resolutions are required for all expenditures including funds held
by municipality
Keep reserve fund at appropriate level
Spend your operating budget, or have a written plan detailing
future use of funds. Advise municipality of plan
Capital expense paid for by the library board of trustees with
funds from the annual mandatory library appropriation may be
considered an eligible cost under certain conditions (see NJAC
15:21-12.5 (c) for details)
Municipal and Library Budget Notes



Best practice: One line in the municipal/county budget gives
the trustees greater flexibility in use and transfer of funds
In those municipalities/counties where the annual library
appropriation is retained in the custody of the municipal/county
treasurer and disbursed by her/him after approval of the
board/commission by resolution, any prior year unexpended
funds remaining from the mandatory library appropriation shall
be retained in the library-controlled account dedicated for
eligible purposes (important to review N.J.A.C. 15:21-12.1)
If funded above 1/3 of a mill, be certain to receive your full
appropriation by November 1
Investments



Public funds must be deposited in banks or trusts in New Jersey
organized under state laws, or with cash management funds
May use N.J.S.A. 40A:5-15.1, Securities which may be
purchased by local units, (provides a list of securities which may
be purchased by library boards) and/or 40:54-19.3, Investment of
funds; regulation of bonds or securities
Municipal libraries as a government agency, may not use a
mutual fund or anything that has stocks or bonds where the
principal is at risk. Funds should be deposited every 48 hours
(N.J.S.A. 40A:5-15)
Fundraising




Boards undertake the education of elected officials
to assure that the library has the funding needed to
provide excellent library service
A foundation is often formed to undertake
fundraising in the form of a capital campaign
Friends of Libraries groups raise funds for expenses
outside of the library’s operating budget
Both the board and director attend programs on
fundraising and investigate opportunities
Annual Audit




The library should have an annual audit that shall
include verification of all cash and bank balances.
(N.J.S.A. 40A:5-4)
If the audit is done by municipal auditors, make sure
you get copies.
If any recommendations are made, correct them
promptly.
Director needs to follow up on recommendations.
File Annual Reports

Board shall make an annual report to the
chief financial officer of the municipality which
shall include a statement setting forth all
revenues received,expenditures made and
balance of funds available. The annual
report shall also include an analysis of the
state and condition of the library and shall be
sent to the municipal governing body and to
the State Library (N.J.S.A.40:54-15)
File Annual Reports



NJSA 40:54-15 was revised in August 2008
New language: The annual report submitted
by the library board of trustees to the
municipality pursuant to N.J.S.A. 40:54-15
MAY identify excess funds that the board
intends to approve for transfer to the
municipality as miscellaneous revenue
pending approval by the State Librarian.
FAQ on this subject and steps required are
available from NJSL
What is State Aid for public libraries?




Since the 1960s, the NJ Legislature has
appropriated funds to support a Per Capita Library
Aid program
Administered by NJ State Library
Municipalities and counties annually submit an
application
Libraries annually submit a report in the form of an
online survey, a Certification and other supporting
documentation as needed
Eligibility for State Aid



Minimum requirements based on decennial
Census population served must be met for
numbers of professional and other staff,
operating hours, collections, and various
public service areas (N.J.A.C. 15:21-2.3)
If not met, State Aid is reduced.
Exceptions may be made through petition to
the State Librarian.
Calculation of State Aid



The amount of tax support in relation to the prior
year’s equalized valuation establishes the aid
category; the greater the funding relative to prior
year’s equalized valuation, the greater the aid
category
5 aid categories – from $ .50 to $1.50 per capita
The Decennial Census is used in the formula to
calculate payments
Summary:





Know your role in promoting the library’s financial
health
Spend time developing, implementing, and
evaluating plans and the budget to make them work
Advocate for your budget – work with local officials
and the community
Seek new sources of revenue
Keep abreast of laws and local traditions
Follow-up Resources





NJ Statutes and Regulations pertaining to libraries
at http://www.njstatelib.org/LDB/Library_Law/
NJ State Library consultants
http://www.njstatelib.org/LDB/factsheet.php
NJ Library Association webpage www.njla.org
Pat Tumulty: [email protected]
Victoria Rosch: [email protected]