Fiscal Responsibility
Read through this section to learn about budgets and finance.
The Trustee Essentials: Understanding Local Government Budgeting and Finance course covers this information in greater detail. Please consider taking that course to learn more.
Investing Depreciation Reserve
22-1-307, MCA provides that money held in the library depreciation reserve fund may be invested as provided by law. All interest earned on the fund must be credited to the library depreciation reserve fund.
These statutes establish that a library board of trustees has the power to accept gifts, donations, grants, etc. of money or property from public or private sources. If the local governing body exercises the discretion granted to it in 22-1-305, MCA by setting up a library depreciation reserve fund, then any money received by the library board as a gift, donation or grant that is not expended by the end of the year maybe deposited into the library depreciation reserve fund per 22-1-306, MCA.
Moneys in the fund may be invested "as provided by law" per 22-1-307, MCA. The statutes do not appear to limit the library boards in the method by which they may exercise the power conferred by section 22-1-309 (8), MCA, other than that the money received be expended or held, worked, or improved for the specific purpose of the gift, grant, donation, devise or bequest.
In the case where a library depreciation reserve fund has not been established, when the gift, grant or donation does not prohibit investment, the library board should ask the donor to give the money to the foundation to invest the funds.
If the board chooses to use the local government's existing accounting system, the board and local government must follow the MCA. They can still invest the funds, but they must follow the guidelines below [adapted from the Montana Municipal Officials Handbook]:
7-6-201, MCA -- deposit of public funds in financial institutions, states that it is the duty of all county and city treasurers and town clerks to deposit all public money in their possession and under their control only in solvent banks, building and loan associations, savings and loan associations, or credit unions, subject to national supervision or state examination as the local governing body may designate.
Money not necessary for immediate use may be placed in savings or time deposit (CDs) or in repurchase agreements.
7-6-202, MCA says that a local governing body may invest public money not necessary for immediate use by the county, city, or town in direct obligations of the U.S. government, including U.S. treasury bills and bonds, as well as a variety of other allowable investments. Investment in money market funds is permitted only in limited circumstances.
Finally, 7-6-207, MCA specifies the security necessary to ensure the safety and prompt payment of all deposits.
Deposit security. (1) The local governing body may require security only for that portion of the deposits that is not guaranteed or insured according to law and, as to the unguaranteed or uninsured portion, to the extent of:
(a) 50% of the deposits if the institution in which the deposit is made has a net worth to total assets ratio of 6% or more; or
(b) 100% if the institution in which the deposit is made has a net worth to total assets ratio of less than 6%. The security must consist of those enumerated in 17-6-103 or cashier's checks issued to the depository institution by any federal reserve bank.
(2) When negotiable securities are furnished, the securities may be placed in trust. The trustee's receipt may be accepted in lieu of the actual securities when the receipt is in favor of the treasurer or town clerk and the treasurer's or clerk's successors. All warrants or other negotiable securities must be properly assigned or endorsed in blank. The appropriate governing body shall, upon the acceptance and approval of any of the bonds or securities, make a complete minute entry of the acceptance and approval upon the record of its proceedings, and the bonds and securities must be reapproved at least quarterly.