Basic accounting practices require that an entity have an appropriately designated budget from which to monitor control of its fiscal operations. Kentucky law requires that every Special Purpose Governmental Entity annually prepare a proposed budget for the expenditure of all funds [KRS 65.065A.080(1)], including all those from local, state and federal sources. The budget must be based on a fiscal year from July 1 to June 30 (KY Constitution §169), unless otherwise authorized by the Kentucky General Assembly. Districts must adopt a balanced budget, with budgeted expenditures not exceeding budgeted revenues, cash and receipts.
The budget must show all funds, in any account and from any source. This includes all carry-over funds, investments, and capital outlay funds (such as construction). In the interest of transparency, all funds should be clearly accounted for by being on the budget document.
The library’s budget for the upcoming fiscal year must be adopted by the library board by June 30. The budget must also be submitted to the
Department for Local Government (DLG) by July 15. No moneys shall be expended from any funds or any sources, except in accordance with the budget which has been filed with the DLG which is available for public inspection. No budget of a district shall become effective until it is submitted to the DLG. If your budget changes during the year, the library board is required to amend the budget and to report that amendment to the DLG. Since no funds may be expended which are not incorporated in the budget document, even a positive change in funds available would render an amended budget necessary.
Any amendments to the budget may be made up to June 30 of the current fiscal year. If an additional expenditure must be made and there exists adequate funding from a previously approved line item which may be dedicated to another line item, a simple transfer of funds would be sufficient. The determination as to when to amend the budget must also take into consideration the type of budget being utilized. A line item budget certainly has more detail than a fund budget, thus the requirements would be relative.
Note that the fiscal court does not have the authority to amend the budget or vote upon it. KRS 67.080(3) states: “The fiscal court shall not exercise executive authority except as specifically assigned by statute.” The fiscal court is acting beyond its authority if it is voting on or modifying the library budget.
However, if the budget is not filed with the DLG as required, the failure to submit the required information may result in funds being withheld by any “agency, entity, or branch of state government” and a publication of the non-compliance in the local newspaper. Continued non-compliance may also subject the library to a special audit by the KY Auditor of Public Accounts for which the library would pay.
Revised April 12, 2021