Financial Policy: Library Fund Balance
Fund balance refers to the difference between the assets and liabilities shown on the Library’s financial statements, governmental funds balance sheet. The Library’s three main governmental funds are the General Fund, Capital Projects Fund and the Special Revenue Fund. Each of these funds may report a fund balance on the Library’s financial statements at the end of each fiscal year and each fund balance will be classified as restricted, committed, assigned or unassigned in order to depict the relative strength of the constraints that control how specific amounts can be spent.
The General Fund is the general operating fund of the Library. It is used to account for all financial resources except those required to be accounted in another fund. The Library’s General Fund Balance will generally be classified as Assigned or Unassigned.
- The Assigned amount of the General Fund Balance represents amounts that are constrained by the Library’s intent to be used for specific purposes, but not restricted nor committed. The Library Board of Trustees approval is needed to authorize the Library Executive Director as their delegate to assign fund balance. (The most common use of Assigned General Fund Balance would be the fund balance amount that would be needed to fund a projected budgetary deficit in the next year’s Library’s budget.)
- The Unassigned amount of the General Fund Balance represents the residual amounts which do not meet other classification criteria. The Unassigned fund balance generally includes the Library’s minimum operating contingency reserve and encumbrances. The Unassigned amount of the fund balance will be noted in the annual financial footnotes.
- The Library’s policy is to maintain a minimum operating contingency reserve of 1/12 of the Library’s annual budget in order to comply with the Georgia Public Library Services’ operating service standards. If unanticipated budgetary shortfalls occur and the contingency reserve falls below the minimum level; priority would be given to replenish the reserve as soon as possible through the reduction of expenditures until savings reach the minimum level.
The Capital Projects Fund has two main purposes: first, to account for capital acquisitions, mainly purchased from the committed fund balance which provides the resources for the future replacement of the Library’s technology infrastructure, equipment and vehicles; second, to account for new branch construction costs that will be reimbursed by County SPLOST funding.
- The Committed amount of the Capital Projects Fund Balance represents the amount that can only be used for the specific purpose of replacing Library assets and receives transfers from the General Fund as a financing source. The Library Board of Trustees approval is required to report the fund balance as committed. The Library Board of Trustees approval is required to modify or rescind the commitment.
The Special Revenue Fund is used mainly to account for the proceeds of Federal and State grants which are legally Restricted to expenditures for specified purposes. When both restricted and unrestricted resources are available for use, the Library policy will use restricted resources first, then unrestricted resources as they are needed. ,/span>