Operating Budget Policy

Interpretation

i)    All references in this policy to an employee, official, officer or other representative of the Library are deemed to include any designate, deputy, or anyone else properly authorized in writing by the Board or Chief Librarian to act in that person’s position.

ii)    Where a position title or name is changed following the adoption of this policy, due to a re-organization of the Library’s functions, or for any other reason, the Chief Librarian will have the authority to amend this policy to reflect such change or re-organization.

iii)    The Chief Librarian will have the authority (in consultation with the Director of Corporate Services and Facilities) to approve (in writing) any request from a Library Director to sub-delegate any authority granted in this policy to a Library Director.

Definitions - In this policy, the following terms have the following meanings:

Accrual Accounting Basis is a basis of accounting used to prepare financial statements in accordance with the PSAB Public Sector Accounting Standards Handbook. Revenues are accounted for in the period in which the transactions or events occurred that gave rise to the revenues. Expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and/or the creation of a legal obligation to pay.  

Annual Budget Report is the report to Council that contains the Annual Operating Budget and Capital Budget.

Annual Operating Budget is the annual budget approved by the Board and Council for the Library’s portion of the Revenue Fund, including revenue, operating expenditures and any transfers to or from Reserves or Other Funds.

Board means the Vancouver Public Library Board.

Budget means the amount approved by Council as “the approved budget” which is referred to in the Vancouver Charter as the “adoption of estimates” in each year (Sections 200, 202, and 219) and, depending on the context in this policy, may mean the Operating Budget, Capital Budget, budgets for the City’s Other Funds, its Departments, Boards and City Affiliates.

Budget Line Item refers to any Operating Revenue or Operating Expense item which has its own separate dollar amount and segregated description within the Annual Operating Budget.

Budget Transfer means any transfer of an amount initially recorded within one Budget Line Item to a different Budget Line Item.

Capital Budget has the meaning given in the Capital Budget Policy.

Capital Project has the meaning given in the Capital Budget Policy.

Chief Librarian means the person appointed by the Board as the Chief Librarian pursuant to the Library Act.

City means the City of Vancouver.

City Annual Operating Budget is the annual budget approved by Council as defined in the City’s Operating Budget Policy.

Council means the elected council of the City of Vancouver.

Director of Finance means the person appointed by Council pursuant to section 210 of the Vancouver Charter as the Director of Finance.

Director of Corporate Services and Facilities means the person appointed by the Chief Librarian as the Library’s chief financial officer.

Library Director An employee appointed by the Chief Librarian as a library director, where the Chief Librarian has expressly delegated to that employee (or employee’s position) any authority granted in this policy.

Operating Expenses are amounts paid or obligations that give rise to a liability in a given year, including but not limited to salary obligations to employees, building occupancy costs, fleet costs, and other payments to third parties, but expressly excluding payments made for Capital (as that term is defined in the Capital Budget Policy).

Operating Revenues are amounts received or obligations of an external third party to pay money or transfer an asset in a given year, including but not limited to: fees, cost recoveries, grants, and transfers from other levels of government, but expressly excluding receipts for Capital (as that term is defined in the Capital Budget Policy).

Other Funds is a reference to the Capital Fund, Property Endowment Fund, Sinking Fund, and Capital Financing Fund, which are managed by the City.

PSAB means the requirements and standards published from time to time by the Public Sector Accounting Board, which publishes the Public Sector Accounting Standards Handbook (as updated and amended from time to time and which is a set of generally accepted accounting principles applied by public sector entities for financial reporting).

Reserves has the meaning set out in the Library Financial Reserves Policy.

Revenue Fund is the fund that receives the Operating Revenues and from which the Operating Expenses are paid for the operations of the City department and boards, and is distinct from Other Funds kept separately by the Director of Finance to provide good governance of the City finances.

Specific Purpose Revenues means Operating Revenues received for a specific purpose (for example a donation made for a specific project or a contribution agreement requiring the funds to be used towards a specific project or program (but not a Capital Project).

1.    Requirement to set a budget

1.1.    The Library is required to present an Annual Operating Budget to Council for the upcoming year. This is included in the Annual Budget Report to Council in December of each year.  On an exception basis, as determined by the Director of Finance, such as may occur in the year of a municipal election, an internal working budget will be developed by December of that year, and a budget will be adopted by Council no later than April 30th of the following year as required by section 219 of the Vancouver Charter.

1.2.    In any year in which the Budget is not approved by Council before December 31st, Council may authorize expenditures as are necessary to carry on the business of the Library/City until the budget is adopted, if the following conditions are met:

(a)    the amount for that Budget Line Item does not exceed the amount for the Budget Line Item in the prior Annual Operating Budget, and

(b)    the expenditure is approved by at least two-thirds of Council.

2.    Basis of Budgeting

2.1.    As the Director of Finance is to present the City Annual Operating Budget on an Accrual Accounting Basis, in accordance with PSAB, or expressly noting any exception to PSAB, the Library will also prepare its Annual Operating Budget on this basis.

3.    Requirement for the City’s Annual Operating Budget to be Balanced

3.1.    As the Director of Finance is to present a City Annual Operating Budget that is balanced: Operating Revenues and Operating Expenses must be equal, net of transfers to or from Reserves and Other Funds, the Library’s Annual Operating Budget will also be balanced.

3.2.    Subject to section 3.3, Council may amend the Annual Operating Budget at any time throughout the year, including amendments requested by the Board (see section 493 of the Vancouver Charter, and section 10 of the Library Act, as applicable).

3.3.    Despite section 3.2, amendments to the Annual Operating Budget may only be approved by Council if the Annual Operating Budget remains balanced. This is typically achieved by transfers from Reserves or where there is a larger than estimated source of Operating Revenues.

4.    Operating Expenses Must be Authorized by Annual Operating Budget and Expenditure Authority and Financial Control Policy

4.1.    Except where otherwise authorized by the Board and Council, this policy, or the Expenditure Authority and Financial Control Policy, or another policy approved by the Board, the Director of Corporate Services and Facilities will only authorize spending that is not in excess of  the Annual Operating Budget.

4.2.    Despite section 4.1, the Director of Corporate Services and Facilities and the Chief Librarian, in consultation with the Director of Finance, may approve

(a)    Budget Transfers, or
(b)    Budget Increases,

to the Annual Operating Budget, if they are not in excess of $750,000 in aggregate for any given year, and only where the Director of Corporate Services and Facilities has determined that such adjustments can be made from Reserves or Operating Revenues (including where applicable new Operating Revenues approved by the Director of Corporate Services and Facilities as being allocable to such Budget Transfers or Budget Increases) such that the Annual Operating Budget remains balanced.  

4.3.    Despite section 4.1, the Chief Librarian or the Director of Corporate Services and Facilities may approve Budget Transfers of up to $200,000 per Budget Line Item, but only where the Director of Corporate Services and Facilities has determined that such adjustments do not result in an Annual Operating Budget that is unbalanced as defined in section 3.1.

4.4.    Notwithstanding the above, any transfers from Reserves must comply with the Library Financial Reserves Policy.

5.    Authority to Delegate Expenditure Authority:

5.1.    Despite section 4.1, the Chief Librarian or the Director of Corporate Services and Facilities may sub-delegate the expenditure authority limits of the Chief Librarian or the Director of Corporate Services and Facilities to other Library staff as determined by the Chief Librarian or the Director of Corporate Services and Facilities from time to time.

5.2.    The Chief Librarian or the Director of Corporate Services and Facilities will document these sub-delegations of expenditure authority limits and controls in the Expenditure Authority and Financial Control policy, and the Chief Librarian or the Director of Corporate Services and Facilities may amend same at any time and from time to time.

5.3.    The Chief Librarian and the Director of Corporate Services and Facilities are responsible for ensuring that appropriate processes are in place in the Library to ensure that their staff comply with the Expenditure Authority and Financial Controls Policy and all other applicable sections of this policy.

6.    Allocation of Revenues

6.1.    All Library Operating Revenues will be allocated to the Library.

6.2.    Specific Purpose Revenues: Specific Purpose Revenues allocated to the Library by the City will be allocated within the Library as determined by the Director of Corporate Services and Facilities, in consultation with the Chief Librarian.

7.    Allocation of Operating Expenses

7.1.    All Operating Expenses will be categorized and allocated generally in accordance with PSAB unless otherwise determined by the Director of Corporate Services and Facilities.
 
7.2.    Where there is any question as to how any particular Operating Expense is to be allocated, the Director of Corporate Services and Facilities will determine the appropriate allocation.   

• Capital Budget
• Procurement
• Library Financial Reserves
• Expenditure Authority and Financial Control (City Policy)

LIBRARY ACT
[RSBC 1996] CHAPTER 264

General powers and duties of library board
9     The library board
(g) May contract, for a term of not more than 5 years, for professional and other services for library purposes.

Budget and financing
10     (1) On or before March 1 in each year, the library board must prepare and submit to the municipal council its annual budget for providing library service in the municipality.
(2) The municipal council must approve, with or without amendment, the budget submitted to it under subsection (1).
(3) At the request of the library board, the municipal council may approve an amendment to the approved budget.
(4) The municipal council must include in the municipality's annual budget a sum sufficient to finance the library board's approved budget.
(5) The municipality must pay to the library board the sum included in the annual budget and the payments must be made on the dates scheduled by the library board and the municipality.

Expenditures and financial statements
11     (1) The library board has, subject to the approved budget, exclusive control over the expenditure of
(a) all money provided by the municipal council for library purposes,
(b) all money given to the library board,
(c) the revenue derived from any source, including
(i) fees,
(ii) fines, and
(iii) money recovered by the library board for detention, damage or loss of library materials, and
(d) all money received by the library board under an agreement to provide library service.
(2) The library board must provide to the municipality annual financial statements that have been audited in the same manner and at the same time as the financial statements of the municipality.

Excerpt from Guidelines on the Relationship between Vancouver, City Council and Vancouver Public Library Board (2008)

Introduction

Vancouver Public Library is a separate legal entity governed under the Library Act of BC.

The relationship between the City of Vancouver and Vancouver Public Library is predicated upon a common understanding that:

The Library Board has sole authority for establishing policy governing the operations of the Library

The Vancouver Public Library will, where appropriate, adhere to Council policies. Any financial policies will be within the authority limits set by Council.

City Council approves the Library’s operating and capital budgets

5 b) Finance

The Library will participate in the annual operating budget process.

The Library will adhere to City policy regarding operating and capital budget reporting and transfer authorities. The Library Board will include plans for new or revised services in its operating budget presentation to Council but also may report to Council on such items at other times of the year. Operating efficiencies will always be sought and the Library will inform Finance of the reallocation of savings to other uses.

The Library’s Director of Corporate Services & Facilities will collaborate closely with City staff on financial matters including the preparation of budget submissions and improved budget controls. The City will provide a variety of financial and other services to the Library including but not limited to: cheque production, periodic audits, processing insurance claims, risk management assessment, inventory control etc.

The City’s Internal Audit department will review the Library’s financial statements annually and report their findings to the Library Board.

The Library Board’s purchasing policies will follow City policy and practice for awarding contracts.