BOT Considers Second Disbursement of Funds to Library
By Kathy Savolt -
In advance of the September 26th Board of Trustees (BOT) meeting, the BOT took up the issue of whether the Library Board and staff had shown sufficient progress before the second disbursement of the funds the Village borrowed on behalf of the Library was made.
This discussion took place at the work session and was attended by members of the Library Board who were informed only after the agenda was publicly posted along with comments from Clerk-Treasurer Agostino Fusco. See HERE
Beginning the discussion, Village Manager Jerry Barberio reminded the BOT that the arrangement with the Library was that the “BOT be comfortable” before the second disbursement of funds from the Tax Anticipation Note (TAN) issued by the Village on behalf of the Library.
In April, the BOT voted to issue a $1.4 million TAN with the proceeds to be disbursed to the Library in three tranches: $300,000 by June 1, $850,000 by September 1 and $261,000 by January 1, 2024. The first disbursement was made. SEE article HERE. Undisbursed funds remain in the Village’s bank account.
Prior to the work session, Barberio asked Fusco to review the material the Library had submitted for review. Fusco had several criticisms which led to Trustee Lou Young to state that he “didn’t feel comfortable”, and the information wasn’t sufficient without giving specifics. Young wanted assurances from Village staff that the Library was on the right track.
Barberio read Fusco’s email and afterward the BOT allowed Ellen Hauptman from the Library Board to address the issues:
· Revised Budget is not balanced – Hauptman stated this was purposely done to avoid repeating the errors of the past (using non-existent reserves) and to indicate the need for the TAN. Hauptman is closely watching the stated gap ($346K) and already has $207K in savings and donations to offset it.
· Fund Balance Deficiencies – Fusco highlighted several deficiencies in the fund balances creating issues with the budget(s). Hauptman agreed and stated that this was prior to the Library Board requesting the TAN. These deficiencies are what drove the request.
· Incomplete 2022 Audit – Hauptman stated that the 2022 draft audit was reliable; the core contents are not changing and all that was missing is the management letter. Hauptman explained that the 2022 audit could not be finalized until the forensic audit had identified all the bookkeeping entries that need to be done to correct the problem with relying on non-existent reserves. She reported that the Library expects the management letter within the next week.
· Lack of Financial Controls – Hauptman reminded BOT members that they discussed this issue at the May 22nd BOT meeting. New financial controls are in place and were developed with input from Clerk-Treasurer Fusco, the NYS Comptroller’s Office, O’Connor Davies (auditor) and Nowracki Smith (forensic auditors). The controls were approved at the May 24th Library Board meeting and were put into effect immediately. A list of these controls is available on the Library’s website. See HERE.
· 2023 Audit – Hauptman said they would start as soon as the 2022 audit was final.
Hauptman assured the BOT multiple times that the Library was “taking this very seriously.” Their goal is financial health defined as: no more TANs (advances on future tax revenue), a lower tax rate, and $300,000-500,000 in the bank for emergencies.
Hauptman has begun work on the 2024-25 budget with the assumptions of at least a 3% cut and a tax increase of 6% (same as current budget). NOTE: The tax increase is a percentage of the budget and with a smaller budget the dollar amount of the tax increase would be less than the prior year – despite being the same percentage. She also stated that the Library may not need the third disbursement of the TAN in December but will need the planned 2024 TAN ($450,000) to continue operations. Hauptman assured the BOT that the Library will have the funds to repay the TAN and offered to share her working 2 year cash flow with the BOT and Village staff.
Mayor Tom Murphy asked why the Library was not planning to raise the tax rate more in order to cover the TAN payment. Hauptman explained that the public votes on the Library budget and they did not want to risk having the budget voted down. Hauptman also stated that she was hoping to have focus groups with the public in October to see if a higher tax rate would be acceptable. Murphy thought this was a good idea.
Young persisted in his requests to have assurances from Village staff and stated he “wanted Village staff on the inside working with you.”
Hauptman reminded the BOT that she has repeatedly offered to meet with Village staff to review data and answer questions but, to date, no one from the Village has contacted her.
Hauptman agreed to provide a written summary of her remarks and send the cash flow document.
Ellen Freeman spoke briefly and stated that the Library has a co-treasurer, Richard Aks, who has a strong financial background, is on the board of Mercy College and is very familiar with non-profits.
The Library is scheduled to present their progress at the September 26th BOT meeting.