Your Library and Its Finances

Understanding these principles and looking for them during the budgeting process and when reviewing financial reports can help you better understand the library’s financial picture.

MCA

The Local Government Budget Act (Title 7, Chapter 6, Part 40 of the Montana Code Annotated) spells out the process for adopting a budget, amending it, and general principles local government officials should follow.

Fund Accounting

Local governments use fund accounting. A fund is used to account for everything associated with that service. There is a library fund in larger governmental entities. All money that is used for library services is accounted for within that fund. 

BARS

Local governments use BARS – Budgetary Accounting Reporting System – which is based on generally accepted accounting practices (GAAP), uses the fund system, and has a standard list of accounts used by governmental entities to report their revenues and expenditures.

Revenue

Local governments – much like private business – need to manage their cash flow. 

Many units of local government receive their revenue in two large payments. Departments will receive almost half of their revenue in December/January and the other half in May/June. This is because property taxes are paid in two installments.

Reserve

To manage this cash flow local governments will carry a certain percentage of money in reserve. This money is found in the cash balance. Clerks and finance officers will track how much money a department has in its cash balance to determine whether the department has enough in reserve.