Purpose

1. Reserve Fund refers to the difference between assets and liabilities in governmental funds. The reserve fund serves as a measure of the financial resources available to a government agency. The Manitowoc Public Library Board of Trustees has approved a Reserve Fund Policy that establishes a range at which the General Reserve Fund balance should be maintained.
2. This policy is established to provide financial stability, cash flow for operations, and the assurance that the Library will be able to respond to emergencies with fiscal strength.

Definitions

The five categories of reserve fund, as established by Governmental Accounting Standards Board Statement No. 54, are as follows:

1. Nonspendable – amounts that cannot be spent because they are not in spendable form (e.g., principle portion of permanent fund, inventory).
2. Restricted – amounts not available for expenditure due to external restrictions, including grant restrictions, laws, or regulations.
3. Committed – amounts that are designated for specific purposes by formal action of the Library Board. (The Library Board may reverse this action if it is later determined the funds are needed for another purpose.)
4. Assigned – amounts management (i.e., Executive Director) intends to use for specific purposes.
5. Unassigned – refers to amounts available for any purpose.

Unrestricted reserve fund refers to the total amount of committed, assigned, and unassigned fund balances.

Note: The Library will spend the most restricted dollars before the less restricted, in the following order: restricted, committed, assigned, unassigned.

Level of Unrestricted Reserve Fund

It is the goal of the Manitowoc Public Library Board of Trustees to maintain no less than 10% and no more than 15% of operating expenses in the General Reserve Fund.

Should the General Reserve Fund fall below 10% of General Reserve Fund revenues a plan for regaining compliance with the policy shall be submitted to the Library Board of Trustees. In the event the General Reserve Fund Balance is above 15%, the difference must be used for property tax relief and/or one-time capital expenditures, which do not increase ongoing Library costs.

Restricted Fund Balances

Funds that are provided by a specific line item in the annual property tax levy are legally restricted to the purpose of that fund.

Monitoring Targets

The Executive Director in conjunction with the Manitowoc Public Library Board of Trustees will monitor revenue collections, expenditures, and availability of cash by reviewing monthly financial reports. The Executive Director shall advise the Board whenever revenue projections suggest that revenue will fall short of expectations, unexpected expenditures will exceed budget, or fund target(s) may not be met by the end of the fiscal year.

Reserve fund balances may fall occasionally outside of the target ranges because of special projects, construction, emergencies, other extenuating circumstances, and/or levy restrictions.

This Reserve Fund Policy will be reviewed on an annual basis by the Manitowoc Public Library Board of Trustees.

Board Approved April 27, 2021