Fund Balance

PURPOSE AND SCOPE
The general purpose of this policy is to improve Mahopac Public Library’s financial stability by protecting itself against emergencies and economic downturns. The policy is designed to help the Library not only to prepare for a financial emergency but also to ensure the continuity of financial operations. This policy sets forth the minimum required fund balance reserves, the allowable uses of the fund balance reserves, and the Library’s plan to achieve the target level of fund balance reserves.

DEFINITONS
Fund balance: the accumulated equity balance in a governmental fund resulting from operations over the years. This is the difference between fund assets and fund liabilities.

Undesignated fund balance: The fund balance, excluding all reserves and any other balance dedicated to another purpose.

Operating budget: All expenditures necessary to meet the daily operations of the Library and any debt service payments.

Capital expenditures: Funds for the improvement of, and/or the addition to, the physical plant and for the purchase of furniture, fixtures, and equipment.

GUIDELINES
The trustees of the Library shall require a Board restricted net asset to be no less than the estimated cost of four (4) months of operation, or 33%, of the most current operating budget.

The minimum amount shall be $430,000 and shall be increased annually until the target amount is reached.

These funds shall be deposited in a separate interest-bearing account that meets the requirements as set forth in the Investment Policy.

An affirmative vote of a majority of the total membership of the Board shall be necessary in order to change either the target amount or the minimum amount.

Policy Adopted: March 25, 2009
Revised: October 28, 2009

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