The Olds Municipal Library has reduced the amount of money in its reserve funds after the Town of Olds discovered the library's reserves were larger than town staff would have liked.
The reduction of the reserves, carried out in consultation with town administration, was completed in order to decrease the amount of funding the library receives from the town.
The library board has agreed to limit operating reserves to three months' worth of expenses and limit capital reserves to 33 per cent of the insured value of capital assets.
Further, the library's reserves will only grow at an amount equal to half of any surplus the library generates in any one year. The remaining half of any surplus will go toward reducing the amount the town gives the library each year in operating funding.
Town council had asked that discussions between town administration and library staff take place on the issue of library requisition as a result of budget deliberations in December 2012. At that time, library staff had asked for a $70,000 increase over the town's contribution to the previous year's library budget. Council finally agreed to give the library $290,780 for 2013, a $50,000 increase over the amount the town gave the library in 2012.
Barbara Hill, the town's director of community services, said the town wanted to modify the library's reserve policy so that the amount the library would request each year of the town – and its taxpayers – would be less.
Rather than funding reserves fully, town officials suggested that the library board put half of any surplus toward reserves and the other half toward operating costs to lessen the burden on taxpayers, she said.
Lesley Winfield, the library's manager, said the discussion regarding the reserves policy was a good way to use the town's expertise to update the policy. But she said as a non-profit organization, reserves are important to cover some expenses until operating funds are received.
“It just ensures that we have a clear direction on what to do with surplus funds, as well as gives us that safety net for those things that any business needs to take into consideration. We rely heavily, as a non-profit organization, on grants … and those grants don't necessarily all come in monthly on a regular basis,” she said.
The town is billed quarterly for its contribution to the library, while other funding, such as a provincial government grant, is received in one lump sum for the year, which Winfield said is often received in June, six months into the library's fiscal year.
