Fund Balance Policy

Purpose

The Board of Trustees for the Peotone Public Library District adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement 54. The purpose of the Fund Balance Policy is to enable realistic long-range planning, assist with effective development of annual budgets, and provide transparency to the public.

This policy establishes a range within which the end-of-year Operating and Capital Reserves Funds should be maintained. This policy is established to provide financial stability, cash flow for operations, and maintenance of an adequate fund balance to ensure that the Peotone Public Library District will be able to respond to emergencies with fiscal strength and responsibly manage long range financial planning.

If the Board of Library Trustees (the Board) adopts a budget which does not meet the parameters of this Policy, the Board will adopt a plan, as soon as is reasonably possible, to revise the budget to meet the parameters of this Policy.

Fund Balance Classification

Nonspendable Fund Balance: assets that are not in the spendable form (pre-paids) or are required to be maintained intact (the principal of a permanent fund).

Restricted Fund Balance: the portion of a fund that is subject to externally enforceable legal restrictions or restricted through ordinances adopted by the Library Board.

Unrestricted Fund Balance: the total of the Committed, Assigned, and Unassigned Fund Balances

Committed Fund Balance: amounts subject to a self-imposed limitation by formal action of the Board. Modification or removal of the limitation may only occur through formal action by the Board.

Assigned Fund Balance: amounts that the Board intends for a specific purpose. Intent may be determined by the Board or delegated to the Director.

Unassigned Fund Balance: the portion of a fund that is available for any purpose.

Funds

Peotone Public Library District maintains two governmental funds.

The General Fund (or Operating Fund) is used to account for general activities not accounted for in another fund.
The Capital Reserve Fund is used to account for resources restricted to capital improvements. The Library adopts an annual budget for each of its governmental funds, as well as adopting an annual appropriation.

Fund Balance Levels

General Fund – The Library will maintain a year-end General Fund unassigned fund balance no less than three (3) months and no more than twelve (12) months of projected operating expenditures for the following fiscal year. Balances above the maximum are transferred annually to the Capital Reserve Fund through Board resolution.
- The purpose of this unassigned balance is to:
  1. Provide a cash flow buffer to fund library operations prior to receipt of tax collections and when property tax collections are delayed.
  2. Serve as a funding source for emergencies.
Capital Reserve Fund – The Library will maintain a Capital Reserve Fund balance sufficient to meet the projected costs of the repairs and replacements as outlined according to the Library’s Capital Improvement Plan, as allowed by 75 ILCS 5/5-8. Transfers into this account may exceed annual capital expenses, allowing the Library to build a reserve to fully fund future projects without incurring debt.

Monitoring Targets

The Director in conjunction with the Board Library Treasurer will monitor revenue collections, expenditures, and availability of cash by reviewing monthly financial reports.

The Director shall advise the Library Board of Trustees whenever revenue projections suggest that revenue will fall short of expectations or unexpected expenditures exceed budget or if for any reason fund target(s) may not be met by the end of the fiscal year. In this event, the Director will take action to reduce future expenditures where appropriate.

Adopted March 19th, 2026