Transcript Budget and Financial Reporting for the New Library Director

February 2015
Budgets and Financial Reporting
for the New Library Director
Kathy Schalk-Greene, Mount Laurel Library
Adapted from a presentation originally prepared by:
Mary Martin, Parsippany-Troy Hills Library
Betsy Kanouse, Denville Public Library
The Unending Financial Cycle
End of Year
Evaluation /
Annual Audit
Plan for and
prepare next
year’s budget
Monitor spending
through monthly
financial reports
As a new director…

You may start your job at any time in this cycle

First find out what “past practice” has been
–
–

Review last year’s audit report for numbers and
recommendations
Ask treasurer and/or bookkeeper to explain how your
library handles things
If it ain’t broke, don’t rush to fix it right away
Who manages your money?
Some municipalities pay the bills for their libraries.
–
–
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Towns must fund their municipal library at 1/3 mil
Your Board (not you) should ask the town for an
accounting of what has been spent each month
Your Board should approve all bills each month
If your municipal library pays its own bills:
–
The town must make a payment to you (part or all
of the 1/3 mil) by March 31 -- even if they haven’t
passed their budget
The Budgeting
Process
The budgeting timeline

Different libraries have different fiscal years.

Different libraries use different timelines.
There is no one right way.

Make things easier on yourself; follow past
practice for your library at least for your first
year on the job.
The Budgeting Process:
Ask for input from staff

Special projects/needs, e.g.:
–
–
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Implement time/print management software
Computer replacement plan
Start a special collection/service (makerspace, etc.)

You may not be able to afford to do everything
now, but it’s good to have a wish list

Grants or unanticipated gifts may become
available; you want to be ready to take
advantage of them
Some numbers you need –
ANTICIPATED INCOME

How much income do you expect to receive?
–
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If you are a municipal library, the municipal
appropriation is announced in October
Fines
Interest from savings accounts/CDs
Gifts
Other?
Some numbers you need –
FIXED & KNOWN EXPENSES


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Salary, payroll taxes, pension costs, health benefits
Chargebacks from town (if any)
Service contracts (HVAC, cleaning, audit,
alarm & fire monitoring, etc)


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
Utilities
Consortium / shared service expenses
Telecom / Internet connectivity
Other?
How do you estimate these
numbers?

Look at your financial reports and audits
from the previous year or two.
–
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
Has spending increased?
Decreased?
Stayed the same?
If you are in a multi-year contract (e.g. HVAC
maintenance) you should know / can ask
what the yearly cost is.
How do you estimate these
numbers?

Make a call! Ask vendors for an estimate. Ask
for discounts!

Keep your ears open.
–
Are pundits predicting an increase in gas costs? You
may need to increase your utilities budget line.
–
What percentage increase in PERS payments are
municipalities anticipating?
What’s left over? Start filling in
other costs:

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Collection and materials
Programming
Library & office supplies
Postage
Other?
Put the numbers together and
voila! A budget!

Your anticipated income should balance with
your anticipated expenses.

If your anticipated expenses are higher than
your anticipated income, you need to trim
your expenses.
–
Where from?
Do you have more income
than anticipated expenses?

Consider yourself lucky!

Review your wish list

Create or add to a restricted capital
maintenance or capital improvement fund

Other?
Presenting the budget to the
Board (and possibly the Town)

Give them the budget, but not your entire budget
calculation worksheet (Too Much Information !)

Have your budget calculation worksheet available to refer
to if you are questioned; be prepared to explain how you
came up with your numbers

Ask for help from your treasurer and/or finance
committee prior to the presentation – they can, and
should, help you prepare!
Monthly Financial
Reports
Useful monthly reports

Expenditures to date vs budgeted expenses
(aka budget control report)

Profit & Loss statement

Bill list
Expenses To Date vs Budget
(aka Budget Control Report – are you on target or over budget?)
Profit & Loss
What did you bring in this month/year? What did you expend?
Bill list What bills need to be paid this month?
Expense vs budget reports (for staff)
Keep staff informed of how much they have spent versus
their budget YTD (year to date)
But wait! There’s more!

What monthly financial reports is your library
currently producing for your board meetings?

Remember the “past practice” guideline. If
it’s working okay, you don’t have to change it
right away (or at all).
The Capital Budget
Your capital budget

Allows you to plan for big projects: roof,
carpeting, HVAC, integrated library system

Consider setting aside a portion of the
operations budget towards future capital
expenses.

Reserve capital funds with a board resolution
Planning for multiple years
Capital budget: Schedule
Capital budget: Resolution
The Audit Process
Your yearly audit

If you are paying for your audit, even if it is
the same auditor as the town, you should
request a proposal that includes the cost of
the audit and what services will be included.

You can negotiate with auditors just as with
other vendors. Auditors charge wildly different
amounts for the same basic product. Ask around –
what are other libraries paying?
Preparing for the Audit

All municipal libraries must be audited each year.
There is no mandated time frame but it’s a good
idea to get it done within the first 6 months.

Your bookkeeper/treasurer may already have
a process for handling the audit in place. If so,
GREAT!
Preparing for the Audit

Ask for help from your treasurer and/or
bookkeeper in preparing for the audit.

There are certain things you know you’ll
need each year.
Deciphering your Audit Report

Ask the auditor to sit down with you and your
treasurer to review the audit.
Remember: you are their paying customer!

If the auditor has any recommendations for
change:
–
Ask questions. How many other public libraries
does your firm audit? Of those, how many have this
procedure in place?
Wrapping it Up
When in doubt, ASK
Do you still have questions? (Of course you do!)

Contact your auditor (anytime throughout the
year) or accountant (if you have one)

Contact the State Library for guidance

Send a shout-out to one of the library listservs.
You are not alone.
Additional Resources:
Giveback of Funds (Municipal libraries)

Return of Excess Funds Law (NJSA 40:54-15)
was passed in 2010

Beware of excess operating reserve funds

For more info, contact the State Library
More additional resources

The state-mandated 1/3 mil municipal appropriation is
posted each October

NJ Library Laws can be found here:
http://lss.njstatelib.org/library_law
Part 6, purchasing, includes info on Pay to Play;
Part 7 includes the Local Fiscal Affairs Law (audit info & more);
Still more additional resources

Your town’s Chief Financial Officer can be a great
resource – but not unless you ask for help.

NJ laws governing municipal fiscal administration:
NJ Department of Community Affairs,
Local Government Services,
http://www.state.nj.us/dca/divisions/dlgs/about/
Questions?
Comments?
Kathy Schalk-Greene, [email protected]