$100,000 hiding in the "books" at the New Hartford Public Library?

A meeting of the New Hartford Public Library was held at noon on Wednesday, January 9, 2013. During that meeting, Treasurer, Earl Cunningham announced that the library had a roughly $10,000 deficit for 2012 and was going into 2013 with approximately a $90,000 surplus.

Mr. Cunningham, as board treasurer, reports at each meeting giving financial reports and sometimes he includes the current balance of each fund maintained by the library.

We have in our files a copy of each and every report of fund balances which we reviewed to determine if a fund containing $100,000 had ever been identified to the board in open meeting. However, the only funds that have been reported at board meetings are the Joshua Turner Fund; the Building Fund; and the Garden Fund. [treasurer reports as of September 30, 2012]

After Treasurer Cunningham finished his presentation, Mr. Wiatr asked if he was referring to the Building Fund when he mentioned the $90,000 surplus.  Of the three (3) funds routinely reported to the library board, it is the only fund that has shown a balance of over $100,000, but Mr. Cunningham responded "no".

In an article that has been posted on the Observer Dispatch website New Hartford Library Surplus Surprises Some, the library treasurer was quoted:

For most of the trustees, this was not out of the ordinary, Cunningham said.

“It was certainly common knowledge to the board as far as my understanding goes,” Cunningham said.

For MOST of the trustees? Who would you be leaving out, Mr. Cunningham? Mr. Wiatr who was and still is a member of the Finance Committee; a committee that has never met because a meeting has never called by the Chairman, namely you Mr. Cunningham?

Treasurer Earl Cunningham went on to say:

"...the funds were amassed over years from extra, various revenues, and always has been there. The surplus was even addressed, he said, at a public meeting in August when the library pursued a charter with the New Hartford School District."

First of all, a town library is governed by the same laws as the town regarding the handling of their finances...AND they must be transparent to the public.

It is our understanding that unexpended fund balances are to be transferred to a fund balance account at year-end, by a vote of the library board, and they are supposed to be accounted for on all financial records?

We are curious as to why the treasurer implies that the money is actually a fund balance and yet the library board told Mr. Wiatr that the the money is part of the operating account.  We would also be curious as to whether or not some of the "excess" money is left over from NYS Construction Grants...money that, according to law, is supposed to be returned if not spent for the purpose of the grant.   NYS Construction Grants are matching grants, so if the library didn't use their own money to cover half of the expenses; they are not entitled to keep all the money that the State awarded them.

By the way, we were at that meeting on August 20, 2012, three days before the rechartering vote. The majority of taxpayers in attendance that evening were not amused with a $1,000,000 budget to begin with; stating that the library had a $100,000 "surplus" fund would have been like rubbing salt into a wound. Suffice it to say that if the Library Board had identified a $100,000 surplus that evening, the crowd would have made it memorable; we have no memory of that being disclosed.

The article also referred to comments by Supervisor Tyksinski. According to Mr. Tyksinski:

Town Supervisor Patrick Tyksinski, a former certified public accountant, said having reserve money is necessary to keep an organization running.

“If you hit a year when maybe your sales tax doesn’t come in where you wanted it you, you definitely need to have a reserve there,” he said.

Eh, we think Mr. Tyksinski was referring to the town; the library doesn't get sales tax revenue unless Mr. Tyksinski was referring to the $50,000 of sales tax money the town board voted to give the library last May...see our blog, A Gentlemen's Agreement.

Additionally, Supervisor Tyksinski was quoted in the article as saying:

Tyksinski said he knew a fund balance existed and that there should always be extra revenues.

In that May 2012 video contained in the blog link above, you said that the library was spending down their Building Fund. Supervisor Tyksinski, if it is truly a Building Fund, wouldn't that be a restricted account? You can't spend restricted monies for just any old thing.  Just like you can't use Consolidated Sewer Fund balance to cover budget shortfalls in other town funds.  So, did you know they had a Building Fund that they were inappropriately using as a "slush fund"...or did you know that they had a fund balance account that probably should have been identified in their budget and used to offset some expenses for the 2013 budget to avoid having to open later on Friday which, by the way, was done absent a library board resolution?

Perhaps Supervisor Tyksinski has been left as much in the dark by the library board as Mr. Wiatr has...or perhaps he merely made those statements to save the library embarrassment regarding how they spend our tax dollars...after all, political season is just around the corner.

Instead of relying on Supervisor Tyksinski's opinion for answers, we decided to consult the library trustees "best friend", The Handbook for Library Trustees, written in 2010 by Jerry Nichols of the Palmer School of Library and Information Science, Long Island University, Brookville, New York with the assistance of the Public Library Systems Directors Organization of New York State; Library Trustees Association of New York State; and the Division of Library Development, New York State Library.

On page 34 Mr. Nichols writes:

Library boards may establish other special purpose funds for accounting and planning purposes. Monies may be transferred into and out of such funds only with formal board approval. Each such fund must be identified in the library’s annual audit and its purpose understood by every trustee.

Having acquired funds from a local government, community taxpayers or other sources, the board has an obligation to spend the money! Although a reserve fund is prudent and appropriate, the library should not hoard excessive amounts of money as a hedge against the proverbial rainy day. Local governments, voters, and donors do not give or appropriate money to the library so the board can put it away in a safe place. They are buying service from the library!

We draw your attention to specific sentences written in the above passages by Mr. Nichols:

• Monies may be transferred into and out of such funds only with formal board approval.
  
  Perhaps if there were formal board approvals as money is being transferred from account to account, Mr. Wiatr wouldn't have been so surprised!

• Each such fund must be identified in the library’s annual audit and its purpose understood by every trustee.
  
  The library has never been audited and the compilations that have been done each year are just that...a bunch of numbers provided to Mr. Dreimiller by the library which Mr. Dreimiller "compiles" to make them resemble financial statements. The compilations do not have any notes attached as is customary with a financial audit and it is near impossible to tell how much money the library may be sitting on let alone what fund it is held in.
  
  The town has hired D'Arcangelo and Co. to audit the library for 2012. According to Earl Cunningham, they will be on site to do the audit in February.

• Although a reserve fund is prudent and appropriate, the library should not hoard excessive amounts of money as a hedge against the proverbial rainy day.
  
  Is the $100,000 really a reserve fund or a fund balance? If it's a reserve fund than when did the board vote to create it; when do they plan to spend it; and what do they plan to spend it on?
  
  However, if it is really a fund balance, is 20% of your current operating expenses too much to set aside for a "rainy day"? It appears to be unusually high especially given the above passage from Mr. Nichols. However, that should be a discussion at the library board table. The first step is to acknowledge to ALL board members ALL funds that exist to include their history, the balance of each fund, and where the money is deposited.

Here is the Treasurer's Report from the January 9, 2013 Library Board meeting where the $100,000 "surplus" fund is discussed.