The Library recognizes that the maintenance of a fund balance is essential to the preservation of the financial health of the Library. This policy provides guidance concerning the desired level of fund balance maintained by the Library to manage financial risk that can occur from unforeseen cash flow shortages, unanticipated expenditures, and similar circumstances.
In keeping with these goals, the Library will maintain a minimum of two months of the operating budget to ensure cash availability when required payments are due. These funds may be split across multiple assigned and unassigned funds and which are, in total, managed under the direct supervision of the Library Director to meet cash flow obligations.
The Library will also maintain a minimum of one month of annual budgeted expenditures to be used for contingencies. Contingencies are defined as those unexpected expenditures that occur during the year for which budgeted funds are not available. Contingency funds may be spent with the direct approval of the Library Board of Trustees. These contingency funds may be split across multiple committed funds.
The Library will classify fund balance as follows -
When multiple categories of fund balance are available for expenditure (e.g., a project is being funded partly by a grant, funds set aside by the Board, and unassigned fund balance), the Library will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
Should the Library’s unassigned and committed fund balances at fiscal yearend fall below the established goal, the Library will develop a plan to restore and maintain the minimum fund balance.
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