Kentucky Public Library Trustee Manual - KDLA

Chapter 4: Fiscal Issues
welfare, security, prosperity, and contentment of all, or at least a substantial part of,
the inhabitants or residents. Otherwise stated, the test of a public purpose should be
whether the expenditure confers a direct benefit of reasonably general character to a
significant part of the public, as distinguished from a remote or theoretical benefit.
The use of public funds for the purpose of making a gift or bonus is addressed in
the Constitution of the Commonwealth. If the library district were to award a bonus
to an employee, the library board would need to be prepared to defend the “gift”
or “award” as an expenditure for a “public purpose.” This has been accomplished
within the case of teacher bonuses because of legislative intent – the legislature
clearly intended for the funds to be expended in this manner (OAG 00-2). No such
legislative intent exists for utilizing library funds for this purpose.
Auditor of Public Accounts Recommendations for Public and Nonprofit
Boards
In 2010, the Auditor of Public Accounts provided 32 recommendations to assist
public and nonprofit boards in designing and implementing internal financial controls.
These recommendations should assist library boards in providing appropriate
financial oversight. The recommendations contain a brief summary of various
financial policy areas that board members should consider. After each control area is
considered, a policy should be developed to address the specific business model of
the organization.
Using this document will enable the library board to demonstrate sound fiscal
management and ensure successful completion of an audit. The document is available
at the Kentucky State Auditor’s website at: http://www.auditor.ky.gov/Public/Audit_
Reports/Archive/2010BoardRecommendationsLetter3-4-10.pdf.
Investment Policy
All funds the library receives, from any source, are considered “public funds” as
soon as the library takes possession. The investment of donations, interest, bequests,
etc., must all be handled under the same guidelines that cover the investment of tax
revenue.
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