Financial Management

1. Monetary Assets: Funds and Reserves

A. Funds are self-balancing accounting entities with separate financial statements detailing their own income, expenses, assets and liabilities.

B. General Fund: The General Fund finances all District programs and consists of the 4 accounts described below. Funds can move as needed among these accounts.

i) Operating Account – This is the approved Annual Budget, which represents the day-to-day planned operations of the District. The balance will fluctuate throughout the budget year; but at each year’s end, the account should retain sufficient funds for operating the first two months of the following year until new tax revenue is received to sustain operating expenses.

ii) Short-Term Operating Reserve – The District will maintain an account balance for fiscal cash liquidity purposes that will provide for sufficient cash flow to operate the District for 3 months. This reserve balance shall be at least 25% of the current year’s budget. This reserve account incorporates the 3% of fiscal year budget required by TABOR as emergency reserve.

iii)  Long-Term Operating Reserve – Whenever the District’s revenue exceeds annual budgeted operating needs, the surplus will be assigned to this account to meet anticipated future operating expenses. The transfer of surplus funds shall  take place when the 13th month is finalized, no later than the end of 1st Quarter.

iv)  Capital Replacement Reserve – The District will assign funds to this account for replacement of assets as deemed necessary to maintain the facility and fixtures to support the Library’s programs and services with a schedule for planned replacement. This reserve shall have a minimum balance of not less than $100,000.

C. Debt Service Fund: In the event that the District assumes voter-approved debt for capital construction, this fund would be restricted to that purpose.

2. District Strategic Financial Plan

A. The Board shall establish, in consultation with the Director, a 10-Year Strategic Financial Plan and shall review it annually.

3. Annual Budget

A. The annual budget is the financial plan for the operation of the District for the current year. It provides the framework for both expenditures and revenues for the year and translates into financial terms the priorities of the District. The fiscal year for the District is January 1 through December 31.

B. The development, presentation and administration of the annual budget are the responsibility of the Director assisted by the designee. The process begins in September with the final budget approved by the Board in December prior to the deadline established by the State of Colorado

C. The proposed budget will be available for public viewing and two public hearings will be conducted prior to final approval in December.

D. The final budget will be approved by resolution and submitted as a total allocated expense amount with a resolution authorizing the mill levy assessment.

E. The Board must approve any subsequent increase to the total allocated expenditures by resolution as soon as practical after the overage is known.

4. Purchasing, Contracts, Check Writing and Credit Cards

A. It is the policy of the District to ensure a responsible method of procurement accountability, maintain budgetary control and secure quality goods and services at the best possible cost.

B. Purchases shall be from the supplier that is lowest in cost when quality and timeliness are comparable.

C. If a purchase is less than $5,000, then the Director may make a selection without soliciting bids or proposals; but, the Director shall take informal quotations and compare prices from as many suppliers of the goods or services as may be practical.

D. For purchases greater than $5,000 the director has the discretion to use US Communities, the Colorado State Purchasing Program.  Because US Communities has already acquired multiple bids, these vendors can be used without the bidding process.  In the event a suitable vendor is not available within US Communities, the Director shall solicit quotes from three or more vendors known to provide the goods or services required.  If three providers are not available, the Director shall solicit bids from as many providers as are determined to be practicable.

E. The Director is delegated the authority to award all bids or contracts totaling less than or equal to $10,000. Only the Board shall award bids greater than $10,000.

F. The Director shall check vendor and contractor references and require proof contractors are licensed, bonded and insured before awarding a contract for services to be performed for the Library.

G. The Director will review all existing contracts with the Board biannually or as needed. Upon renewal, it may be decided to rebid the contracts as stated above.

H. Credit cards may only be used for official library business. Credit cards will be distributed to the Director, and the Director has authority to further distribute cards to staff with significant purchasing responsibilities. Each cardholder must sign the District Credit Card Agreement. Credit cards must be surrendered upon termination of employment or at the request of the Director.

5. Fixed Assets

A. The District considers it in the best interest of the public it represents to provide a record of fixed assets owned by the District. To be classified as a fixed asset, a specific unit of property must possess three attributes: tangible value, an expected life of more than one year, and an original cost or recorded value of at least $5,000. A unit includes all components necessary for the unit to be used for its intended purpose.

B. The District shall maintain a system for an annual inventory of all items meeting the above criteria. This system shall serve the functions of controlling and monitoring the assets of the District. Responsibility for the system shall lie with the Director or their designee.

C. Assets purchased and classified as a fixed asset pursuant to this policy shall be recorded as capital outlay and inventoried as fixed assets for financial reporting purposes. Assets meeting all but the original cost criteria shall be recorded as a separate category of capital outlay.

D. Fully depreciated surplus property may be disposed of with the following priorities:

i)  Another library or other non-profit public agency, preferably by sale.
ii)  A publicly advertised sale.
iii) Sold to liquidators or auction houses.
iv) Discarded if deemed to be in such poor condition that it cannot be sold.

6. Investments

A. Scope: This Investment Policy (Policy) applies to activities of the District with regard to investing the financial assets of the District.

B. Objectives: Funds of the District will be invested in accordance with this policy and Colorado Revised Statutes (C.R.S.) § 24-75-601. The District’s investment portfolio shall be managed in a manner to attain an adequate rate of return throughout budgetary and economic cycles while preserving and protecting capital in the overall portfolio. The primary investment criteria in priority sequence are safety, liquidity and yield.

Investment maturity terms must be selected and planned to ensure availability of funds for planned expenses. All General Fund accounts are eligible for investments; however, liquid assets must be readily available when their designated use is required.

C. Delegation of Authority: The Director or designee shall be the Investment Manager (Manager) responsible for investment decisions and activities. Prior to any delegation, the Director shall report the proposed delegation to the Board, with rationale for the delegation. The person or entity that receives the delegation may not further delegate the function. The Manager shall operate the investment management program consistent with this policy. The Finance Committee (Committee) appointed by the Board shall assure that the Manager complies with this policy and report any inconsistencies to the Board.

D. Prudence:

i)  The standard of prudence to be applied by the Manager shall be the Prudent Investor Rule, which states that investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. This rule shall be applied in the context of managing the overall portfolio.

ii)  The Manager, acting in accordance with this policy and exercising due diligence, shall not be held personally responsible for specific investment transactions, a security’s credit risk, or market price changes.

iii)  The Manager will be held responsible for ensuring sufficient liquidity of investment so District operations can be maintained with minimal borrowing in the event of failure of any financial institution.

E. Portfolio Management and Monitoring:

i)  All investments will be made in accordance with the C.R.S., which include the following: § 30-10-708 C.R.S. (Deposit of Funds in Banks and Savings and Loan Associations); § 11-10.5-101 C.R.S. et. seq. (Public Deposit Protection Act (PDPA)); § 24-75-601 C.R.S. et. seq. (Funds – Legal Investments); § 24-75-603 C.R.S. (Depositories); and § 24-75-702 C.R.S. (Local Governments – Authority to Pool Surplus Funds). Any revisions or extensions of these sections of the statutes will be considered to be part of this policy immediately upon the effective date following enactment.

ii)  The Manager shall organize, control, and make decisions relating to cash flow needs and investment opportunities. When entering into any fixed term investments, the Manager shall select investments with maturity terms consistent with the District’s future cash flow requirements. Instruments should be selected that provide the greatest value within the maturity required and within the parameters of this policy.
In addition, the Manager shall conduct a due diligence review of the condition and the regulatory history of each financial institution, including state pools, prior to investing.

iii)  The contents of the investment portfolio shall be regularly reviewed by the Committee and presented to the Board for review annually, or more frequently as requested, as an investment report. The report shall consist of: ratings of investments, yield, benchmark comparisons, and narratives.

iv)  The Manager may convene a group of knowledgeable citizens to act as advisors. This group shall have no power to modify these investment policies or make any decision delegated to the Investment Manager under these policies, but shall be advisory only.

F. Portfolio Diversification:

i)  All investments will be considered either short-term (less than one year) or long-term (one to five years). Investments should be chosen by the Manager to meet the objectives for cash flows set forth in Board approved strategic plans and budgets.

ii)  The Manager shall diversify investments by using multiple investment vehicles so that, whenever possible, the total portfolio is well diversified.

iii)  Instruments and diversification for the long-term portfolio shall be the same as for the short-term portfolio. No long-term investments shall exceed 5 years without approval by the Board.

G. Safekeeping and Collateralization:

i)  All fixed term investment securities purchased under this policy shall be held in third-party safekeeping by a custodial institution (Custodian) eligible under § 24-75-601 C.R.S. The Custodian shall issue a safekeeping receipt listing the specific instrument, rate, maturity, and other pertinent information.

ii)  Deposit-type securities, such as certificates of deposit, shall be collateralized as required by PDPA for any amount exceeding Federal Deposit Insurance Corporation (FDIC) or Federal Saving and Loan Insurance Corporation (FSLIC) coverage. Money market instruments such as U.S. Securities and Exchange Commission (SEC) registered money market mutual funds qualified under § 24-75-601 C.R.S. and state pools under § 24-75-701 C.R.S. shall be collateralized as required by law.

7. Cash Management and Banking

A. It is the policy of the District to ensure safe and secure handling of monies through an efficient cash management program. Funds will be held only by banks, which insure funds through the FDIC or are organized as a Government Investment Pool as defined in
§ 24-75-701 C.R.S.

B. The District subscribes to dual-control practice. The Director, Accountant, Board President and Treasurer are the only approved signers. Two signatures are required for:

i)  Opening and closing of accounts
ii)  Signing checks generated in-house
iii) Authorizing any transfer of funds transferred

C. All bank statements will be reconciled monthly by the Accountant and reviewed by the Director and the Committee. All Expenditures will be reviewed monthly by the Committee.

D. Cash receipts will be accounted for using procedures and documentation developed by the Director.

E. The District accepts payments in cash, checks, and electronic transfer. Individuals issuing checks that are returned for insufficient funds or any other reason may be submitted to collections and assessed a charge of $20.00.

F. The District is authorized to maintain petty cash up to $ 100.00. The purpose of petty cash is to provide money for staff making small purchases which are needed immediately and do not exceed the sum of $20.00. Receipts are required.

G. Cash and salary advances to employees and cashing of employee personal checks are not allowed.

8. Debt Management

A. All legal debt as prescribed by C.R.S. is a potential means for raising funds.

B. The Board may authorize temporary short-term borrowing when appropriate. Term of the loan may not exceed six months.

C. A business line of credit, not to exceed $100,000, shall be established for the purpose of providing business credit cards to designated staff (see Section 4. I).  The total amount of the credit line shall be established by the Director and approved by the Board.  Two signatures shall be required to secure a business line of credit; 1) the Director, and 2) either the Board President or the Board Treasurer.  The Director shall designate the Accountant to act as Administrator of the business credit card account.

D. The Board may authorize ballot issues that if successful would allow issuance of capital bond instruments for major construction funding.

9. Gifts and Memorials

A. The District acknowledges the great importance of gifts and donations to the Library’s future development and growth. All gifts are considered accepted when the Director or the Board determines that they can be utilized by or be of benefit to the Library.

B. The Estes Valley Library Friends & Foundation (Friends & Foundation) will accept and manage all gifts of cash, securities, real property and bequests made to the District that are compatible with the Library and the Friends & Foundation policies, the donor’s intent, and applicable laws.

C. Donations of books and other similar materials are transferred to the Friends & Foundation after the Library staff selects those materials that comply with the Library’s regular selection criteria. 

10. Monitoring and Reporting

A. The Director is responsible for submitting to the Board a monthly report showing revenue, expenses and fund balances to date. The Director will highlight variances to the approved budget in the monthly report.

B. During the fourth quarter of each fiscal year, the Director shall present to the Board an annual report addressing compliance with requirements of these Financial Management Policies. This report shall also include required reporting on investments as prescribed in Section 6. INVESTMENTS, subsection E. Portfolio Management and Monitoring.

C. In the event that any of the Reserve accounts fall below their required minimums, the Director shall immediately alert the Board, and shortly thereafter propose a plan for reestablishing those accounts to their minimum requirements.

D. On a semi-annual basis the District shall engage an outside financial professional to provide reasonable assurance regarding the achievement of preventive and detective activities with the following objectives:

i)  Reliability of financial reporting and transactional financial activities
ii)  Compliance with applicable laws and regulations

11. Annual Audit

A. As required by § 29-1-601 through § 29-1-608 C.R.S. (Local Government Audit Law), and § 24-90-109 (Library Law), the Board shall ensure that an annual audit of the financial affairs and transactions of all funds and activities of the District be conducted for each fiscal year, and that the results of the audit be distributed as described in these statutes.

B. It is the duty of the Committee to oversee the annual Financial Audit. It is the auditor’s responsibility to plan and conduct the audit. The auditor, with input from the Library staff, determines that the District’s financial statements are in accordance with generally accepted accounting principles.

C. Audit shall be completed and the audit report submitted by the auditor to the District Board no later than the June board meeting.

D. The Committee, working with the Director will initiate a review of the audit engagement and performance of the contracted Auditor every five years.  Bids may be solicited as part of this review in order to ensure competitive rates.

——————————————————

The Estes Valley Library Financial Management Policies were adopted and approved by the Estes Valley Public Library District Board of Trustees on November 17, 2014 and revised on September 15, 2017, November 18, 2019 and February 16, 2021.

John Krueger, President                                           Peter Johnson, Secretary