Section 4: Finances
- Section 4.1: Authority to Spend
- Section 4.2: Budget and Finance Policy
- Section 4.3: Financial Division of Responsibility between Board and Librarian
- Section 4.4: Indemnification and Insurance
- Section 4.5: Investment of Public Funds
- Section 4.6 Routine Banking Procedures
- Section 4.7: Returned Checks
The budget is viewed by the Board as the financial plan for MAPLD, and approval of the budget by the Board provides authority for the Library Director to manage MAPLD’s finances without seeking further Board approval.
In accordance with Section 5-5 of the Illinois Local Library Act (75 ILCS 5/5-5), governing the procedure for awarding construction, repair or remodeling contracts when the cost is in excess of $20,000, all such contracts shall be awarded in accordance with the provisions thereof and potentially more restrictive Board rules and regulations, including, but not limited to: (1) advertisements for sealed bids or requests for proposals will be properly handled through the public media; (2) sealed bids, based on authorized specifications, or requests for proposals shall be received at a public bid opening and include all costs for labor and materials, bid bond, performance bond and certificate of insurance; (3) bids will be tabulated and submitted to the Board along with staff’s recommendation for action; and (4) formal contracts with appropriate signatures for both Board and Contractor are required.
All expenditures will be reported to the Board on a monthly basis, and the Library Director will not make expenditures outside of the budget without seeking Board approval therefore.
Adopted: December 10, 2012
Revised: November 11, 2013
The MAPLD has a Board-approved, written budget. The budget is developed annually as a cooperative process between the Board’s finance committee, the Library Director, and additional staff members with responsibility for budgetary elements. Each year, the Board of Trustees determines if the Library’s revenues are adequate to meet the Library’s needs. If the revenues are not adequate to meet the Library’s needs, the Board of Trustees will take action to increase the Library’s revenue.
The MAPLD spends a minimum of 12% of its operating budget on materials for patrons. Materials include books, audiovisual materials, periodicals, telecommunication costs for reference services, fees for online information services, and CD products, among other things. Costs related to the installation and maintenance of a LAN or shared bibliographic databases are not included.
On a monthly basis, the Library Director will present written reports on Library operations to the Board of Trustees. These reports will include such areas as finance, library usage, matters of personnel, collection development, and programming in addition to any other relevant and pertinent information.
The Library maintains records of Library operations in a manner easily understood by the public as well as the Board of Trustees and Library Director. This record of Library operations is presented at each Board of Trustees’ monthly meeting and clearly indicates the financial position of the Library. In addition to the general financial position of the Library, this record clearly indicates the current position of each budgetary line item including budgeted amount, receipts, monthly and year to date expenditures, and remaining budget.
Approved: December 10, 2012
Revised: November 11, 2013
Financial Status of the Library
Board responsibility: The Board shall remain aware of the financial condition of the Library.
Librarian responsibility: The Librarian shall provide a report of budget status and expenditures at each Board meeting. The Librarian shall supply facts and figures to the Board to aid in interpreting the Library’s financial needs.
Joint responsibility: The Librarian shall prepare two annual budgets in consultation with staff and Board; first, the appropriation budget which anticipates the needs for the coming year, and second, an operating budget, once the available revenues are determined. The Board shall work with the Librarian to formulate these budgets, adequate to carry out the Library’s goals and objectives, in accordance with state law.
Board responsibility: The Board shall present the budget to the general public, shall explain and defend it, shall help to secure adequate funds for staff and services, and shall explore ways of increasing the Library’s revenue stream through exploration of other resources and taking advantage of all available means of cooperating with other Libraries.
Librarian responsibility: The Librarian shall assist the Board in cooperating with other libraries and shall call the Board’s attention to ways of augmenting the budget.
Joint responsibility: The Librarian shall work with the Board in interpreting budget and financial needs to public officials and the public. The Board and the Librarian shall see that complete and accurate records concerning finances, personnel, property inventory, and annual reports are on file at the Library.
Approved: December 10, 2012
Revised: November 11, 2013
The MAPLD Board, in consultation with the Library Director, its insurance agent or risk manager and its attorney, shall maintain appropriate trustee and employee liability insurance, including, but not limited to, professional liability or errors and omissions insurance and/or directors and officers liability insurance. This trustee and employee insurance is in addition and exclusive from other liability insurance maintained by the MAPLD, including but not limited to coverage for property damage, bodily injury or physical injury.
Approved: November 11, 2013
Under this instrument, the Board of Library Trustees of the Matteson Area Public Library creates its Investment Policy. It is the policy of the Library to invest all funds under the Library’s control in a manner which will provide the highest investment return using authorized instruments, while meeting the Library’s daily cash flow demands and in conformance with all State statutes governing the investment of public funds.
This Policy shall apply to all investments entered into on or after the effective date of this instrument.
4.5.2 Investment Guidelines:
The primary objective in the investment of Library funds is to ensure the safety of principal, while managing liquidity to pay the financial obligations of the Library, and providing the highest investment return using authorized instruments.
The safety of principal is the foremost objective of the investment program. Library investments shall be undertaken in a manner which seeks to ensure the preservation of capital in the portfolio. To attain this objective, diversification, as defined in Section 4.5.9 of this Policy, is required to ensure that the Library prudently manages market, interest rate and credit risk.
The investment portfolio shall remain sufficiently liquid to enable the Library to meet all operating requirements which might be reasonably projected.
126.96.36.199 Return on Investment:
The investment portfolio shall be designed to obtain the highest available return, taking into account the Library’s investment risk constraints and cash flow needs and the Library’s desire to promote fiscal responsibility. The portfolio shall seek to obtain the highest investment return using authorized investments during budgetary and economic cycles as mandated in Section 4.5.1 of this Policy.
The rate of return achieved on the Library’s portfolio will be measured against relevant industry benchmarks at regular intervals to determine the effectiveness of investment decisions in meeting investment goals.
4.5.3 Authorized Investments
a. All investments shall be those permitted by state law (30 ILCS 235/2) as follows:
(1) Bonds, notes, certificates of indebtedness, treasury bills, or other securities now or hereafter issued, that are guaranteed by the full faith and credit of the United States of America as to principal and interest;
(2) Bonds, notes, debentures or other similar obligations of the United States of America, or its agencies and instrumentalities;
For purposes of this Policy, the term “agencies of the United States of America” includes (i) the federal land banks, federal intermediate credit banks, banks for cooperative, federal farm credit banks, or any other entity authorized to issue debt obligations under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and Acts amendatory thereto; and (ii) the federal home loan banks and the Federal Home Loan Mortgage Corporation; and any other agency created by Act of Congress.
(3) Interest-bearing savings accounts, interest-bearing certificates of deposit, interest-bearing time deposits, or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act (205 ILCS 5/1 et seq.), provided, however, that such investments may be made only in banks which are insured by the Federal Deposit Insurance Corporations;
(4) Short-term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the three highest classifications established by at least two standard rating services and which mature not later than 270 days from the date of purchase, (ii) such purchases do not exceed 10% of the corporation’s outstanding obligations, and (iii) no more than one-third of the Library’s funds are invested in short-term obligations of corporations;
(5) Money market mutual funds registered under the Investment Company Act of 1940 (15 U.S.C.A. ‘80a-1 et seq.), provided that the portfolio of the money market mutual fund is limited to obligations described in Section 2(a)(1) and (2) of the Public Funds Investment Act (30 ILCS 235/2(a)(1) and (2));
(6) Short term discount obligations of the Federal National Mortgage Association (established by or under the National Housing Act (1201 U.S.C. §1701 et seq.)), or in shares or other forms of securities legally issuable by savings banks or savings and loan associations incorporated under the laws of Illinois or any other State or under the laws of the United States, provided, however, that the shares or investment certificates of such savings banks or savings and loan associations are insured by the Federal Deposit Insurance Corporation;
(7) Dividend-bearing share accounts, share certificate accounts, or class of share accounts of a credit union chartered under the laws of the State of Illinois or the laws of the United States; provided, however, the principal office of the credit union must be located within the State of Illinois; and, provided further, that such investments may be made only in those credit unions the accounts of which are insured by applicable law.
(8) The Public Treasurer’s Investment Pool created under Section 17 of the State Treasurer Act (15 ILCS 505/17) or in a fund managed, operated, and administered by a bank, subsidiary of a bank, or subsidiary of a bank holding company, or use the services of such an entity to hold and invest or advise regarding the investment of any public funds.
(9) Repurchase agreements of government securities having the meaning set out in the Government Securities Act of 1986 (15 U.S.C.A. §780-5) subject to the provisions of that Act and the regulations issued thereunder, provided, however, that such government securities unless registered or inscribed in the name of the Library, shall be purchased through banks or trust companies authorized to do business in the State of Illinois; and such other repurchase agreements as are authorized in subsection (h) of Section 2 of the Public Funds Investment Act (30 ILCS 235/2). Repurchase agreements may be executed only with approved financial institutions or broker/dealers meeting the Library’s established standards, which shall include mutual execution of a Master Repurchase Agreement adopted by the Library.
(10) Any other investment instruments now permitted by the Public Funds Investment Act or hereafter permitted by the Public Funds Investment Act by reason of amendment thereof.
(11) Investments may be made only in those savings banks or savings and loan associations, the shares or investments of which are insured by the Federal Deposit Insurance Corporation.
4.5.4 Periodic Review of Investment Portfolio
The investment advisor or advisors appointed by the Board of Trustees pursuant to Section 4.5.17 herein shall make a periodic review, not less frequently than weekly, of the Library’s investment portfolio, its effectiveness in meeting the Library’s needs for safety, liquidity, rate of return, and diversification, and the general performance of such portfolio. The investment advisor shall report to the Administrative Librarian of the Library on an “as needed” basis, and shall report to the Board of Trustees at least quarterly.
Investments shall be made with the judgment and care under the 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 preservation of their capital as well as the probable income to be derived. This “prudent person” standard shall be used by all investment officers of the Library and shall be followed in making investments for the Library and in managing those investments.
4.5.6 Ethics and Conflicts of Interest
a. Authorized investment officers of the Library and employees in policy-making positions shall refrain from personal business activity that could conflict, or give the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Such individuals shall disclose to the Library any material financial interests in financial institutions, which conduct business with the Library, and they shall further disclose any personal financial investment positions that could be related to the performance of the investment portfolio. In addition, such individuals shall subordinate their personal investment transactions to those of the investment portfolio, particularly with regard to the time of purchases and sales.
b. No person acting as Treasurer or financial officer for the Library, or who is employed in any similar capacity by or for the Library, may do any of the following:
(1) have any interest, directly or indirectly, in any investments in which the Library is authorized to invest.
(2) have any interest, directly or indirectly, in the sellers, sponsors, or managers of those investments.
(3) receive, in any manner, compensation of any kind from any investments in which the Library is authorized to invest.
4.5.7 Authorized Broker/Dealers and Financial Institutions
a. Authorized investment officers shall utilize the Library’s approved list of financial institutions when selecting institutions to provide investment services. No public deposit shall be made except as authorized by the Illinois Public Funds Investment Act (30 ILCS 235/0.01 et seq).
In addition, a list shall be maintained of approved security broker/dealers selected according to their creditworthiness, and their financial efficiency in serving the Library, which shall be measured in terms of the location of the broker/dealer’s corporate office, the number of full-time employees, the size of its payroll, and the extent to which the broker/dealer has an economic value to the Library. The list may include “primary” dealers or regional dealers which qualify under Securities and Exchange Commission Rule 240.15c3-1 (Net Capital Requirements For Brokers Or Dealers).
b. All financial institutions and broker/dealers who want to qualify to bid for investment transactions must initially, and on a periodic basis upon request, provide to the Library’s authorized investment officers the following, where applicable:
(1) Audited financial statements;
(2) Proof of minority/female/disabled broker status;
(3) A trading resolution;
(4) Proof of State of Illinois registration;
(5) Completed Broker/Dealer Questionnaire;
(6) Certification of notice and knowledge of the Library’s Investment Policy;
(7) Published reports for brokers from rating agencies with investment grade ratings;
(8) Proof of emerging broker status; and
(9) Consolidated Reports of Condition and Income
An annual review of the financial condition and registration of qualified bidders will be conducted by the Library’s authorized investment officers. More frequent reviews may be conducted if warranted.
c. A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the Library establishes a depository, trading, or safekeeping relationship. Qualified bidders shall submit annual audited financial statements and shall submit financial statements when a material change occurs in the financial conditions or registration of qualified bidders.
4.5.8 Investment Restrictions
a. Authorized investment officers shall not invest in tri-party repurchase agreements or derivative products, and will not leverage assets through reverse repurchase agreements.
b. Except for repurchase agreements of government securities which are subject to the Government Securities Act of 1986, the Library shall not purchase or invest in instruments which constitute repurchase agreements, and no financial institution may enter into such an agreement with or on behalf of the Library unless the instruments and the transaction meet the requirements of Section 2(h) of the Illinois Public Funds Investment Act (30 ILCS 235/2(h)).
c. Repurchase agreements may be executed only with approved financial institutions or broker/dealers meeting the Library’s established standards, which shall include a mutual execution of a Master Repurchase Agreement adopted by the Library.
d. Investment in commercial paper is permissible if rate A1/P1.
Collateralization will be required above depository insured amounts on two (2) types of Library investments:
(1) Deposit Collateralization: Collateral securities approved by the Library with a market value equal to at least 110% of deposits in excess of $100,000 per institution shall be required. The collateral shall be marked to market and adjusted, if necessary, to the 110% level on at least a weekly basis. Insured certificates of deposit, share certificates, surety bonds and letters of credit with a value of at least 102% of deposits in excess of $100,000 per institution shall be required.
(2) Repurchase Agreement Collateralization: Direct treasury securities with a market value equal to at least 102% of the value of the repurchase agreement shall be maintained at all times. Repurchase agreement collateral shall be marked to market at the time of execution and daily thereafter.
The investment portfolio shall be diversified to eliminate the risk of loss resulting from concentration of assets in a specific maturity, a specific issuer or a specific class of securities. In order to properly manage any risk attendant to the investment of Library assets, the portfolio shall not exceed the following diversification limits unless specifically authorized by the Library:
(1) The Library shall seek to achieve diversification in the portfolio by distributing investments among authorized investment categories among financial institutions, issuers and broker/dealers;
(2) The investment portfolio shall at no time hold time deposits constituting more than 10% of any single financial institution’s total deposits;
(3) No investment category shall exceed 40% of the Library’s portfolio, with the exception of cash equivalents and treasury securities as defined herein; and
(4) The Library shall invest the majority of Library funds in authorized investments of less than one (1) year maturity. No investment shall exceed two (2) years maturity.
4.5.11 Safekeeping and Custody
All security transactions entered into by the Library shall be conducted on a delivery-versus-payment (DVP) or receipt-versus-payment (RVP) basis. Securities shall be held by a safekeeping agent designated by the Library, and evidenced by safekeeping receipts.
4.5.12 Internal Controls
The Library’s investment advisor(s) shall establish a system of internal controls, which shall be documented in writing and filed with the Library’s Board of Trustees for review. The controls shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets or imprudent actions by authorized investment officers.
4.5.13 Asset Allocation
The allocation of assets within investment categories authorized herein shall be approved by the Library.
4.5.14 Competitive Bidding
Authorized investment officers shall obtain competitive bids from at least three (3) broker/dealers prior to executing the purchase or sale of any authorized investments.
Certificates of deposit shall be purchased by authorized investment officers on the basis of a qualified financial institution’s ability to pay a required rate of interest to the Library set on a daily basis. Such rate is generally determined on the basis of treasury or other appropriate market rates for a comparable term.
4.5.15 Limitation of Liability
The standard of prudence to be used by authorized investment officers shall be the “prudent person” standard as stated herein, and shall be applied in the context of managing an overall portfolio. Authorized investment officers acting in accordance with written procedures and this Policy and exercising due diligence shall be relieved of personal liability for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and necessary action is taken to control adverse developments.
a. Financial reports shall be prepared monthly by the Investment Advisor(s) and reviewed by the designated Library Accountant. The report shall contain the following:
(1) Performance as compared to established benchmarks;
(2) Asset allocation;
(3) Any circumstances resulting in a deviation from the standards established herein;
(4) Impact of any material change in investment policy adopted during the quarter;
(5) The average days to maturity; and
(6) A listing of all investments in the portfolio marked to market value, including but not limited to information regarding securities in the portfolio by class or type, by value, income earned and market value as of the report date.
b. The Library’s investment advisor(s) shall develop performance reports in compliance with established industry reporting standards within six (6) months following the adoption of this Investment Policy. Such reporting standards may include those sanctioned by the Association of Investment Management Research (“AIMR”) in accordance with Generally Accepted Accounting Principles (“GAAP”).
4.5.17 Delegation of Authority
a. The Board of Trustees may employ one or more investment advisor(s) possessing superior capabilities in the management of assets of governmental bodies. The Board of Trustees shall require the investment advisor(s) selected and working on behalf of the Library to meet the following conditions:
(1) To take actions in the exercise of its discretion which in its best professional judgment are in the best interests of the Library and in accordance with this Policy. Such actions include but are not limited to (a) the allocation of Library funds among alternative types of investments; (b) specific investment opportunities regarding the acquisition, retention or disposition of investments; and (c) the recommendation of the addition, deletion or modification of authorized investments.
(2) To execute all investment transactions on behalf of the Library at the best net price, utilizing such approved brokers and dealers, as it deems appropriate to obtain the best execution capabilities and/or valuable information with respect to the economy, at the lowest cost to the Library.
(3) Such additional responsibilities as are set forth in such investment advisor’s written contract with the Library.
b. The Library’s investment advisor(s) shall be responsible for establishing the internal controls in written procedures for the operation of the Library’s investment program as set forth in this Policy.
c. Until the Board of Trustees appoints one or more investment advisor(s), management responsibility for the investment program set forth in this Policy is delegated to the Board Treasurer. In the event the Treasurer is not available, the President or Vice President of the Board is authorized to so act.
4.5.18 Reservation of Rights
The Library reserves the right to amend this Policy at any time upon the advice and consent of its Board of Trustees.
4.5.19 Availability of Policy
This policy shall be available to the public at the Library’s main administrative office.
Approved: November 11, 2013
The Library Director of the MAPLD is authorized to make deposits into appropriate Library accounts. Such deposits include, but are not limited to, the deposit of accumulated fees and fines, gifts, donations, grants, and any tax receipts not directly deposited.
The Library Director of the MAPLD is authorized to transfer funds from one Library account to another Library account for payment of monthly Library bills which have been approved by the Board of Library Trustees.
The Library Director of the MAPLD is not authorized to sign checks or receive cash from Library accounts unless the Board of Trustees authorizes such action through the approval of checks to reimburse petty cash.
Approved: December 10, 2012
Revised: November 11, 2013
Any person whose check is returned because he or she does not have an account with the drawee bank, or because he or she does not have sufficient funds in his account is liable, for the amount of the check, an administration fee of $25.00, and for any other costs and expenses including interest and attorney’s fees.
The MAPLD will notify patrons in writing if their check is returned by the bank for any reason (e.g. insufficient funds, stop payment, or account closed).
The patron will be required to pay in cash or with a certified check the amount described in paragraph 1 above.
MAPLD reserves the right to refuse to accept personal, non-certified checks from persons who have previously had checks returned for any reason.
A person who issues a bad check or order to a payee and who fails to pay the amount of the check or order to the payee within 30 days following either delivery and acceptance by the addressee of a written demand both by certified mail and by first class mail to the person’s last known address or attempted delivery of a written demand sent both by certified mail and by first class mail to the person’s last known address and the demand by certified mail is returned to the sender with a notation that delivery was refused or unclaimed shall be liable to the payee for, in addition to the amount owing upon such check or order, damages of treble the amount so owing, but in no case less than $100 nor more than $1,500, plus attorney’s fees and court costs. An action to recover on a bad check may be brought in small claims court or in any other appropriate court. As part of the written demand required hereby, the Library shall provide written notice to the payee of the fact that prior to the hearing of any action to recover on a bad check, the payee may tender to the Library, and the Library shall accept, as satisfaction of the claim, an amount of money equal to the sum of the amount of the check and the incurred costs, including the cost of service of process, and attorney’s fees. See 720 ILCS 5/17-1E.
Approved: December 10, 2012
Revised: November 11, 2013