Submission Date:
Question:
We are a small municipal library serving a village of 6500 & a town population the same size. Our village trustees have decided to take our balance from the 2022-2023 fiscal year & add to the village general fund. Does New York State Education Law #259 apply here? We were told it is just the Attorney General’s interpretation of the law & does not keep the balance in the library’s possession.
Answer:
For me, the most persuasive commentary on this topic is from the NYS Comptroller, who wrote in 2002:
This Office has previously noted that no provision of law requires that library fund monies-that are not expended during a fiscal year be returned to the municipality or school district which sponsors the library (see, e.g., 1983 Opns St Comp No. 83-32, p 37; see also Opn No. 87-49, supra). Therefore, we have expressed the opinion that library fund monies remain the property of the library and surplus monies in a municipal or school district public library fund, or surplus moneys held by the library treasurer, may be carried-over from year to year, and accumulated and expended for proper library purposes as determined by the library board (see [*3] e.g., 1980 Opns St Comp No. 80-260, p 71; 1979 Opns St Comp No. 79-866, unreported; 1975 Opns St Comp No. 75-399, unreported; see also Buffalo and Erie County Public Library, supra; compare Korn v Gulotta, 72 NY2d 108, 534 NYS2d 108; but see Town Law § 107[1], Village Law § 5-506[1][c], County Law § 355[1][g], as amended by L 2000, ch 528).
I am leaving the citations in the quote above to show that the Comptroller didn't just randomly arrive at this opinion; it is based in both law and case law.
Despite this clear line of reasoning, it is not unheard of for towns and villages to claw back surplus funds from the library budget at the end of a fiscal year. Why do they do it? Because they can. Why can they do it? Factors include:
- Is there a separate levy for the library (a "414"), or is it funded like a Town Department?
- Does the library have an agreement with the municipality to serve as custodian[1] of the library's funds, or have things just "always been that way"?
- Does the library have its own fiscal controls, or does it just use the municipality's?
- Does the library have a policy regarding "Fund Balance"?
To be clear: none of these factors should be determinative of how strong an argument a library can make to retain surplus funds and accumulate a fund balance from year to year. The opinion of the Comptroller is clear: the library has that power.
But if the matter comes up for debate, it is important that the library be able to make a strong case for retaining the funds. Those arguments are:
- If there is a separate levy for the library (a "414"), the funds were unambiguously levied for the library.
- If the municipality serves as the custodian of library funds per an agreement, the agreement can address the retention of surplus; without an agreement, past practices can be changed at the whim of a town or village leadership.
- If the library does not have its own fiscal controls, it risks appearing unready to take on the fiscal responsibilities.
- If the library does not have a policy regarding "Fund Balance"[2], it is not in an optimal position to argue that it has a plan for money (and is thus entitled to it).
So, the very plain answer to the question "Does New York State Education Law #259 apply here?" is: YES. However, it is clear not everyone sees it that way...and until there is some new case law[3] to go on, the more a library can make a compelling argument that those surplus funds not only rightly belong to the library, but also that the library is entitled to and relying on them, the better.
Thank you for an important question. It sounds like your Town should give that money back, but if that ship has sailed (with your library's money!) laying the groundwork to retain surplus funds in the future would be good fiscal planning.
[1] I am not addressing the contingency where the library is the custodian of the funds (using its own bank account), since clawing back a fund balance is less likely to happen when the library Treasurer demands and takes custody of the money. For that reason, if a library and board have the capacity to be the custodian of the funds, I urge libraries to do that! --But only if you have the capacity (and the fiscal policies).
[2] For instance, some libraries use their surplus fund balance as a rainy-day fund, or to advance or match moneys when they apply for grants. So long as there is a rational relationship between the amount in the fund and the identified purpose, it is not only allowed, but appropriate, for a public library to maintain such a fund.
[3] Sadly, behind every useful case we can cite in favor of this interpretation, there is a legal action that probably cost the participants a great deal of stress and money. In the case such as this, what is called an "Article 78" could be explored to demand return of the money. Most libraries, realizing they could win the battle but lose the war, would not try suing...or even threatening.
