September 9, 2013

Question

Joyce Chapman (NC)

I have two questions from directors. One received two LSTA grants via the State Library last year but they went to capital projects: one was an RFID project and one was for migrating to a new ILS. She wanted to know whether the money should be included in 302, Federal Government Revenue, or 402, Federal Government Capital Revenue. I thought they should be 402 (at least the directions seem to clearly state that they should be) but she thought they should be 302. I’m still foggy on what capital projects and revenue even are!

Second, another director said the town pays the library’s rent for them and the money never passes through the library. She wanted to know if in her 300 Local Revenue she reports only money that passes through the library, or does she do it like on the Maintenance of Effort calculation where that rental income counts toward her operating revenue. She has also been reporting $15,000 that she gets every year from the local ABC board in question 300 because it’s county money. But that money is not counted in her annual Maintenance of Effort on State Aid records. What do you all think?

Thanks!

SDC Comments

Susan Mark (WY)

Here's how I would interpret it.

Federal money is federal money, even if it changes hands. In the first question, it's a 402. As for what constitutes a capital project, I would think both these would qualify under the definition "(g) other one-time major projects." Both sound major to me, both sound one-time. Some might dispute this on the ILS, but I'd definitely consider RFID conversion a capital project. What we do not want counted in capital are the day to day operations and recurring maintenance.

The second question to me is a bit fuzzier in my mind. I have told my libraries that if it doesn't go through their budget, it's not income. So the rent would not count in my book. I'm not sure what others are doing on this. I might be doing it wrong. We don't do state aid that need proof of maintenance of effort, so don't have any thoughts on that part.

Diana Very (GA)

In Georgia, we consider all funds that go to library operations as local government funding. That would include rent paid by the city, janitorial services paid by the local government, utility bills, staff salaries, etc. If the local government can pull the amount from their accounting system of the expense used for the library, (usually in a cost center in their accounting system), then it's counted as on-behalf local funding and added to the total of local revenues and local expenditures.

We have a larger population and larger funding amounts to consider than Wyoming. In FY12 I would have not documented over $31 million if I didn't count on-behalf local funds.

Thanks,

Michael Golrick (LA)

I agree with Susan on the first question. There is no doubt in my mind that those two LSTA projects are capital projects.

For the second question, I would note that the instructions are pretty clear for 300: “Do not include the value of any contributed or in-kind services…” That to me is an in-kind service. Now how you handle this (or the other, for that matter) for your state reports, is entirely up to your local practice, and I would simply urge you to be as consistent as you can both for a library over time, and among the different libraries. Let me also note, that as a public library director I struggled with this when the library I ran was unable to answer questions about the benefit costs. The city was self-insured, and even the city budget did not include any provision for individual departments to report expenses for benefits. It was a mixed blessing, which I can explain at further length if needed. At least one of my libraries has this issue.

Colleen Hamer (MT)

I agree with Susan and Michael on the capital projects.

On reporting rent/benefits paid thru those indirect methods mentioned, I think reviewing the below highlighted elements of the operating revenue and expenditures definitions indicates that the revenue and expenditure should be reported if the information is available. 

OPERATING REVENUE

Report revenue used for operating expenditures as defined below

OPERATING EXPENDITURES

Operating expenditures are the current and recurrent costs necessary to support the provision of library services. Significant costs, especially benefits and salaries, that are paid by other taxing agencies (government agencies with the authority to levy taxes) "on behalf of" the library may be included if the information is available to the reporting agency.

Diana Very (GA)

Colleen,

Thanks for the definition of "on-behalf".

Rob Geiszler (VT)

D’accord, with respect to question 1.

However, with respect to #2, I tend to disagree with Michael.  I think when we collect this information, we’re trying to determine how much it costs to run a public library.  If cash is being paid out by the library, or on behalf of the library, I think it’s legitimate to count it on the income side.  We have several towns that pay the librarians directly out of town funds.  These don’t flow through the “library” account.  I have asked those librarians to be sure to contact the municipality and retrieve these amounts and count them on both the expense and revenue side.  The source of the funds doesn’t make much difference, does it?  If these weren’t coming out of the town or city coffers, they’d be coming from library fund directly but, the town would have had to have deposited the money in the account. We’ve just eliminated a step. But … somehow they need to be accounted for, if we want to have a complete picture. The rental payments sound like this to me.

I draw the line at something like snowplowing, or maintenance, where there’s no cash trail, though.  I’m not willing to let someone take a guess at how much the snowplowing or painting done by town employees is worth.  That’s in-kind, and if there’s no invoice that’s marked “paid” or “forgiven,” it doesn’t exist.

No?

Jamie McCanless (WI)

Here in Wisconsin:

• All LSTA grant funds received by individual public libraries are reported as 302 federal revenue and all capital expenditures of federal funds are reported as 402 federal capital revenue/expenditure, so our libraries would report the funds you describe in both places.
• If a payment is made on behalf of our libraries without being sent to the library itself, it is not included in the library’s annual report. Rent paid to a property owner by the municipality would not be reported as income by our libraries.
• When we had Maintenance of Effort, it applied to operating expenditures from municipal sources only (not county, state, federal, or funds used for capital). County money received by a library would not have been included in our MOE calculations.

Robert Jones (IL)

Agreed on the federal money (402). However, I do tell library directors when they call saying “I don’t see any money from local government” though they know what is budgeted for the library and what is spent (by their local government) to include it as local government income and expenditures on their annual report.

Jamie McCanless (WI)

This discussion appears to have ended, but I misspoke and want to correct myself.

Here in Wisconsin:

• Regardless of program source, income for capital expenditures is not reported as operating revenue. In Wisconsin, the LSTA funds you describe would only be reported as 402 federal capital revenue/expenditure.   All LSTA grant funds received by individual public libraries are reported as 302 federal revenue and all capital expenditures of federal funds are reported as 402 federal capital revenue/expenditure, so our libraries would report the funds you describe in both places.
• Our report instructions read “Library operating costs paid directly by the municipality may be included as library revenue and expenditures; however, the library must be able to document the expenditure of these funds for library purposes.” So, provided that the Wisconsin library indicates the rent amount separately, rent paid by the municipality to an independent third party on its behalf could be reported as operating revenue.   If a payment is made on behalf of our libraries without being sent to the library itself, it is not included in the library’s annual report. Rent paid to a property owner by the municipality would not be reported as income by our libraries.