Maud Preston Palenske Memorial Library
Policies on Library Financial Administration

Financial Planning and Budgeting

Budgeting is a way of expressing financial planning in numbers.  To that extent, each year’s operating budget will be considered the financial plan for that year.  When the Board revisits its long range/strategic plan, financial forecasting will be part of the process.

When the Board of Trustees approves the budget for a fiscal year, projects that are included in the budget are understood to have board approval (separate approval for these projects will not be sought).

Investment of Funds

The Board of Trustees is cognizant of its fiduciary responsibility for management of public funds. The library will adhere to state laws regarding public funds, and will follow the guidelines of the City of St. Joseph and St. Joseph Charter Township for the investment of funds for the library.

All investments shall be made in compliance with Michigan statues governing the investment of public funds and in accordance with the policies of the municipalities governing the library.

The library’s funds will be invested in a manner that will provide the highest investment return with the maximum security. 

The library’s investments shall remain sufficiently liquid to enable the library to meet its daily operating requirements.

This investment policy applies to all financial assets of the library, which are accounted for in the various funds of the Library.  These funds will include the general fund, special revenue funds, debt service funds, capital project funds, enterprise funds, internal service funds, trust and agency funds, endowment funds, and any new fund established by the library.

In priority order, the primary objectives of the Library’s investment activities shall be:

1. Safety of principal.  Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.

2.  Diversification.  Investments will be diversified by security type and institution.  The purchase of CDs from approved financial institutions exceeding the FDIC insured limit or the FSLIC insured limit is authorized.

3.  Liquidity.  The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.

4.  Return on Investment.  The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and the cash flow characteristics of the portfolio.

Management responsibility for the investment program is hereby delegated to the President and Treasurer of the Board of Trustees, who shall establish written procedures and internal controls for operating the investment program consistent with this investment policy.  No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Board of Trustees.  The Board of Trustees President and Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.

The Library is limited to investments authorized by PA 20 of 1943, as amended, and may invest in the following:
     a.  Bonds and other direct obligations of the united States or an agency or instrumentality of
          the United States
     b. Certificates of Deposit, savings accounts, deposit accounts, or depository receipts in one of
         the following types of financial institutions:
              1. A state or nationally chartered bank
              2.  A state or federally chartered savings and loan association
              3.  A state or federally chartered savings bank.
(These financial institutions shall either be a member of the Federal Deposit Insurance Corporation or a member of the Federal savings and Loan Insurance Corporation.  In addition, the financial institution must maintain a principal office in the State of Michigan and operate under the laws of the State of Michigan and the United States.)
     c. Commercial Paper rated at the time of purchase within the two highest classifications
         established by not less than two standard rating services and which mature not more than
         270 days after the date of purchase.
     d. Bankers’ Acceptances (BA’s) of United States banks.
     e. Obligations of the State of Michigan or any of its political subdivisions that at the time of
          purchase are rated as investment grade by not less than two rating services.
     f.  Investment pools organized under the Surplus Funds Investment Pool Act (Public Act 367
         of 1982, MCL 129.111 to 129.118, i.e. bank pools)

If Bankers’ acceptances are utilized as an investment vehicle the credit rating of the issuing bank shall be confirmed prior to purchase.  Only BA’s classified as “eligible” (a BA which the Federal Reserve Bank stands ready to purchase or accept for discount – accept as collateral for advances to member banks) shall be employed as an investment vehicle.

All security transactions, including collateral for repurchase agreements and financial institution deposits, entered into by the Library shall be on a cash (or delivery vs. payment) basis.  Securities may be held by a third party custodian designated by the treasurer and evidenced by safekeeping receipts as determined by the Board of Trustees.

The Board of Trustees Treasurer shall provide to the Library’s Board of Trustees semiannual investment reports which clearly provide the following information regarding the investment portfolio: types of investment, depository institutions, principal balances, rates of return, and maturities.

Employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which would impair their ability to make impartial investment decisions.

This policy shall be reviewed annually, and any modifications must be approved by vote of the Board of Trustees.  

Competitive Bid Process

At all times, it is the overriding goal of the Library Trustees to use Library funds in a manner that provides maximum benefit for the library. 

To assist in achieving that goal, three competitive bids will be sought for all items and projects with an anticipated cost of more than $4000.  Whenever possible, the bids will be requested from local sources. 

The director shall recommend the best bid to the library board for acceptance.  Typically, the best bid will be the lowest bid, but if circumstances suggest another bid to be the most viable, that bid will be awarded the contract.

Acceptance of Gifts

Monetary gifts received by the Library are an occasion for gratitude and appreciation.  Monetary gifts will be placed in a designated Gifts and Bequests Fund.

If any gift carries a request for a restricted use which does not meet the library’s current goals and objectives, the Director shall seek the approval of the Board before accepting the gift.  If the Board determines that the restrictions on the gift are indeed outside of the library’s focus, the gift will be refused.

All gifts accepted for a special purpose shall be honored and used for those purposes.  The library will keep records to show the approximate expenditures of these restricted funds.

Because Gifts and Bequest Fund expenditures are not part of the annual operating budget, all purchases from this fund shall receive prior approval by the Library board. 

Grants

When required, applications for grants shall have the approval of the Library board before submission.

Grant funds requiring special reporting and auditing shall be placed in a designated account.  Small grants which do not require extensive recordkeeping or special auditing shall be tracked internally.

Expenditures from these accounts shall not require prior approval by the Library Board, but all such expenditures shall be included on the monthly list of disbursements.

March 2006