$400K Added to Town Budget for Library Spending

Southbury First Selectman Ed Edelson updated his proposed operating budget for fiscal year 2013-14 by including $400,000 of additional spending for the Southbury Public Library.

The addition is funded by a proposed $400,000 appropriation from the Library Gift Fund and the result will have no impact on the mill rate, according to Edelson.

The proposed overall town budget for operating expenses per accounting principles is the same as last year. The impact on the taxpayer however is less, as there are revenue offsets that were not part of last year’s budget. The net result is a 1 percent decrease in the revenues requested from the property owners.

Edelson released a statement explaining the move, saying his objectives for doing this are to make sure the generous donations to the Southbury Public Library are managed with proper accountability, transparency, controls and financial stewardship

Edelson issued the following statement this week:

My reason for taking this action now is to reaffirm our unwavering commitment to the Library and to ensure that the Library Board, who make the decisions about the appropriate purchases for the library, have sufficient funding provided to them for next Fiscal Year.

It is time to put the issue of the mechanics of library funding behind us and focus on our mutual interest in keeping our library great through the annual generous support it receives from taxpayers – more than twice the average of other towns in Connecticut, per capita – and the proper use of funds provided by generous donors.

Going through the budget process provides oversight and requires accountability that the Library Board is spending the money reasonably.  The assurance that this oversight and accountability will keep a future Library Board from misspending outweighs any risk of voters indiscriminately saying no to a request to use gift funds that are restricted to use for library purposes in any event.

For those who have not been following the events regarding the proper management of the Library Gift Fund, here is a brief synopsis:

• Soon after coming into office, I found that the donations to the Southbury Public Library, a department of the Town of Southbury and not a separate entity, were held in bank accounts that were opened without a resolution from the Board of Selectmen or the Town Treasurer. 
  
  
• The bank accounts, which at that time totaled about $1,400,000 were being managed at the home of a volunteer without the aid of an automated accounting system as agreed to with the Board of Finance after it was recommended by the auditor.  Only volunteers on the Library Board had signature authority on these bank accounts.  An annual audit was conducted but with scant documentation on expenditures; some checks had no memo item to explain the expenditure.
  
  
• The funds were not being managed by a professional money manager, placing the volunteers at risk (as well as the Board of Selectmen who were still responsible for the money as the bank accounts used the town’s federal identification number).  They were placed in about a dozen CDs at various banks with an average yield of less than 1%. There was no publicly available annual report prepared on the sources and expenditures of the Library Gift Fund.  There was no oversight by the Board of Selectmen or Board of Finance about the sources and expenditures of the Library Gift Fund.
  
  
• Despite months of efforts and significant legal costs to discuss and come to some agreement on how to manage the funds, I made the decision in the spring of 2012 to approach all of the banks involved and explain that the signatures should be changed to those used for all other town owned funds.   All future purchases made and gifts received would flow through the town’s modern computerized accounting system – MUNIS.   At that time, we also said that the funds would be managed professionally, with the most likely idea being that we would use the professional financial firm that we had engaged to manage the employee pension fund.  Of course the funds would be managed separately as they have very different objectives.  To the best of my understanding, everyone agrees that that this move was the right thing to have done.  As a result there is less risk and better reporting tools for the library staff and library board.
  
  
• At that time, the Board of Selectmen approved formation of a special temporary library committee to come up with a way forward.  They created an agreement that had as its objective making sure donor intent is uppermost and at the same time complying with State Statute and Town Charter.  After many meetings, an agreement was reached and the document was approved by the Library Board and Board of Selectmen.  Unfortunately, it has now become apparent that the agreement was ambiguous and possibly contradicted the Town Charter.  As each group interpreted the agreement, an impasse came about, including passing a motion at a recent Town Meeting to indefinitely postpone any decision on the appropriation or release of $60,000 for spending by the library board.  As a result, no major purchase orders over $20,000 can be approved at this time.

My main concern, now that we have addressed the accounting and financial considerations regarding the Library Gift Fund, is to make sure the Library Board has sufficient funds to do its work in FY 14.  With the inclusion of $400,000 in the FY 2014 budget as noted above, the Library Board will be able to get back to its work of defining/reviewing policy for the activities of the library and determining how to spend all the monies authorized for library activity, excluding items that are the under the proper supervisory responsibility of the Board of Selectmen like employee performance review and salary action.

I think the town owes a good deal of gratitude to our legal counsel, Jeff Tinley. Jeff has been with the town through three different administrations.  He has acted ethically and patiently throughout this ordeal to make sure the town is complying with the State Statutes and Town Charter.   He has listened to other legal advisors who have argued forcefully for their clients and then demonstrated the deficiency in those arguments.  His guidance and counsel on this matter has been top notch.

From the outset, I realized that change would be difficult.  However, we did not really have a choice.  The situation as it existed at the end of 2011 was in violation of the Charter, lacking in good accounting and financial management and counter to the type of transparency that good governance requires.  I hope that we can all get back to the business of running and enjoying an outstanding library.