Reaching Across Illinois Library System (RAILS)
Fiscal Accountability Policy
- Fiscal Accountability Policy - Original Ratified by RAILS Board July 1, 2011
- Fiscal Accountability Policy – APPROVED by RAILS Board December 19, 2011
- Fiscal Accountability Policy – APPROVED by RAILS Board January 25, 2013
- Fiscal Accountability Policy – APPROVED by RAILS Board September 27, 2013
- Fiscal Accountability Policy – APPROVED by RAILS Board February 26, 2016
- Fiscal Accountability Policy – APPROVED by RAILS Board May 27, 2016
- Fiscal Accountability Policy – APPROVED by RAILS Board August 24, 2018
The purpose of the Reaching Across Illinois Library System (RAILS) Fiscal Accountability Policy is to provide a framework for the fiscal operations of the System, to assure sound fiscal management and to outline responsibilities for management of the System's public funds.
II. Scope of Policy
This Fiscal Accountability Policy applies to the financial and investment activities of all funds under the direction of RAILS. This Fiscal Accountability Policy will also apply to any new funds or temporary funds placed under the direction of RAILS. In the event that this Policy is inconsistent with the Illinois Compiled Statues or the Illinois Administrative Regulations, the statutes and regulations shall take precedent.
A. RAILS financial policies and procedures will be in accordance with the requirements and intents as outlined in Illinois law, rule and regulation.
B. At a minimum RAILS will obtain a treasurer's bond equal to 50% of RAILS' area and per capita grant for the previous year. As an alternative to a treasurer's bond, RAILS may require the treasurer to secure for the system an insurance policy or other insurance instrument that provides the system with coverage for negligent or intentional acts by system officials and employees that could result in the loss of system funds. Additional members of the RAILS Board and RAILS staff may be bonded as required by the RAILS Board.
C. All members of the RAILS Board and all employees of RAILS shall be bonded with a dishonesty bond of at least $100,000 and insured against lawsuit, as per the errors and omissions liability insurance carried by RAILS.
D. The current and past seven years' financial records of RAILS shall be maintained and kept at RAILS headquarters, except in cases when the temporary removal of such records is required by law or by auditing procedures. RAILS will maintain records at least as long as and in accordance with conditions required by the Local Records Act (50 ILCS 205). Older records may be stored in offsite storage.
E. Maintain an inventory of all equipment purchased as required by State Administrative Rule 23 IL ADC 3030.26.
F. Roll call action will be taken by the RAILS Board on all financial matters. Directors with economic conflicts of interest shall abstain from voting, in accordance with the Public Officer Prohibited Activities Act (50 ILCS 105) or any other applicable state statute, rule or regulation.
G. The total budget by fund will be approved by the RAILS Board.
A. All income received at RAILS will be deposited to appropriate accounts at least monthly or whenever the amount of receipts totals more than $500, in accordance with appropriate internal control procedures involving two or more individuals.
B. Deposits in any one institution may not exceed the FDIC insured amount unless they are adequately collateralized or secured by an irrevocable Letter of Credit pursuant to Regulations of the Federal Reserve and authorized by the Illinois Public Funds Investment Act provisions regarding custody and safekeeping of collateral.
V. Expenditures and Other Financial Transactions
A. Authorized signatories are by title the RAILS Board President, Vice-President, Secretary, Treasurer, RAILS Executive Director and RAILS Associate Executive Director.
B. Financial transactions for expenses up to a $10,000 limit require one signature. Financial transactions over $10,000 require two signatures, one of which must be by one of the above Board Member signatories. All financial transactions will be reported to the RAILS Board at its regularly scheduled meeting. Personnel-related items will be paid in accordance with RAILS payroll schedule or monthly depending on payment schedule. A payment cycle of no more than once a week will be used for all other financial transactions.
C. Members of the RAILS Board, the RAILS Executive Director, and all RAILS employees who have direct supervisory authority over or direct responsibility for contracts entered into by RAILS in the amount of $1,000 or greater shall be required to file statements of economic interest with the appropriate county clerk or state authorities. RAILS will provide to the Illinois State Library, as part of its annual application, a copy of all RAILS Board of Directors members and staff filed Statement of Economic Interests.
A. The objective is to invest all funds under RAILS' control in a manner which will provide the highest investment return using authorized instruments (see Section E.1.c), while meeting the System's daily cash flow demands and in conformance with the Illinois Public Funds Investment Act (30 ILCS 235/2.5).
B. The RAILS Executive Director is responsible for recommending to the RAILS Board financial institutions (e.g., Illinois Funds, banks, savings and loan, credit unions and other non-banks) that will be the depositories for RAILS. The RAILS Board will select financial institutions and will annually review the selection of depositories. Any financial institution, upon meeting the requirements of the Illinois Compiled Statutes and of this policy, may request to become a depository for RAILS funds. RAILS will take into consideration security, size, location, financial condition, service, fees, competitiveness, and the community relations involvement of the financial institution when choosing depositories. The RAILS Executive Director or Associate Executive Director and one board officer may authorize investment of funds in such institutions as approved by the RAILS Board. Authorized investment transactions shall be executed by Finance Department personnel with appropriate internal control procedures involving two or more individuals. RAILS funds not currently needed for operating expenses shall be invested as permitted by law.
C. Management and administrative responsibility for the investment program is hereby delegated to the RAILS Executive Director. The RAILS Executive Director is responsible for establishing internal controls and written operational procedures designed to prevent loss, theft or misuse of funds.
D. All RAILS investment activities shall use a "prudent person" standard of care. This standard shall be applied in the context of managing an overall portfolio and specifies that investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital, as well as the probable income to be derived. Investment officers, acting in accordance with this Policy and the written procedures of RAILS, and exercising due diligence, shall be relieved of personal responsibility for a security's credit risk of market price/value changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
E. The following guidelines will be used to meet the general investment objectives:
- Legality and Safety:
- Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
- Investments will be made only in securities guaranteed by the U.S. government, or in FDIC-insured institutions including Savings Association Insurance Fund (SAIF) or the FDIC. Deposit accounts in banks or savings and loan institutions will not exceed the amount insured by FDIC coverage unless adequately collateralized or secured by an irrevocable Letter of Credit pursuant to Regulations of the Federal Reserve and authorized by the Illinois Public Funds Investment Act provisions regarding custody and safekeeping of collateral.
- Authorized investments include and will primarily consist of Certificates of Deposit, Treasury Bills and other securities guaranteed by the U.S. Government, participation in Illinois Funds, and any other investments allowed under State law that satisfy the investment objectives of the System.
- Liquidity: in general, investments should be managed to meet liquidity needs for the current month plus one month (based on forecast needs) and any reasonably anticipated special needs.
- Credit risk: RAILS will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by prequalifying the financial institutions, broker/dealers, intermediaries, and advisors with which RAILS will do business, and by diversifying the portfolio so that potential losses on individual securities will be minimized.
- Interest-rate risk: RAILS will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity, and investing operating funds primarily in shorter-term securities.
- Yield: within the constraints on Illinois law, considerations of safety, and this investment policy, every effort should be made to maximize return on investments made. All available funds will be placed in investments or kept in interest bearing deposit accounts unless restricted from earning interest.
- Simplicity of management: the time required by RAILS administrative staff to manage investments shall be kept at a minimum.
F. Reporting: investments and the status of such accounts will be reported at each regularly scheduled meeting of the RAILS Board and include interest earned as of the report date.
G. Ethics and Conflicts of Interest: authorized investment officers of RAILS and employees in policy-making positions shall refrain from personal business activity that could conflict, or give the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Such individuals shall disclose to RAILS any material financial interests in financial institutions which conduct business with RAILS, and they shall further disclose any personal financial investment positions that could be related to the performance of the investment portfolio. In addition, such individuals shall subordinate their personal investment transactions to those of the investment portfolio, particularly with regard to the time of purchases and sales. No RAILS Board of Directors member or the Executive Director, no person acting as Treasurer for or financial officer for RAILS, or who is employed in any similar capacity by or for RAILS, may do any of the following:
- Have any interest, directly or indirectly, in any investments in which RAILS is invested.
- Have any interest, directly or indirectly, in the sellers, sponsors, or managers of those investments.
- Receive, in any manner, compensation of any kind from any investments in which RAILS is authorized to invest.
VII. Grant Contracts
A. The RAILS Executive Director is authorized to sign contracts for receipt of funds for grants that have been awarded by the Illinois State Library or for other grant sources that have been authorized by the RAILS Board.
B. Occasionally RAILS may be granted funds upon which no interest may be earned due to Federal government regulation. In such a case, the RAILS Executive Director is authorized to establish an additional account for grant funds at a financial institution with which RAILS has a working relationship.
VIII. Borrowing Funds
A. For the purpose of meeting temporary cash shortages, the RAILS Board President, Vice-President, Secretary, Treasurer, and the RAILS Executive Director may, with signatures of two of the above-named positions, borrow sums of money in amounts not to exceed the total of the last three payroll periods and one month's average of RAILS expenditures, based on the previous twelve month expenditures.
B. The RAILS Board may authorize further borrowing of funds including a line of credit [FN1] to meet additional temporary shortages for the operation of RAILS, as well as for long-term building, repair, maintenance, or lease/purchase purposes.
IX. Purchasing/Sale of Goods and Services
A. All purchases for goods and services for RAILS shall be authorized by the RAILS Executive Director through established procedures. RAILS may utilize educational and special discounts, which benefit RAILS.
B. Purchases of $25,000 or More
- All contracts for supplies, materials or work involving an expenditure of $25,000 or more, other than professional services, shall be awarded to the lowest responsible bidder after due advertisement at least once in a newspaper or newspapers of general circulation within the area of the system not less than 14 days before the bid date.
- All competitive bids for contracts involving an expenditure of $25,000 or more must be sealed by the bidder and must be opened by a board member or employee of the system at a public bid opening at which the contents of the bids must be announced. Each bidder must receive at least three days' notice of the time and place of the bid opening.
- The RAILS Board of Directors may reject any and all bids and re-advertise. The system shall not be required to accept a bid that does not meet the system's established terms of delivery, quality and serviceability requirements.
- In case of an emergency when the emergency expenditure is approved by a majority of the RAILS Board, a contract can be let without advertising for bids. When possible, emergency purchases shall be made on the basis of three informal competitive quotations.
- In the event purchases are made through a joint purchasing program of the State of Illinois, or other intergovernmental cooperative purchasing activity, which activity awards it purchases on the basis of competitive bids in accordance with the Governmental Joint Purchasing Act (30 ILCS 525), the requirements above are waived.
- library materials; purchases and contracts for the use, purchase, delivery, movement or installation of automation equipment, software or services and telecommunications equipment software and services; contracts for utility services such as water, light and heat; where services are required for legal counsel, professional engineering and architectural services, provided that procurement of such engineering or architectural services complies with the Local Government Professional Services Selection Act (50 ILCS 510); for artistic skills or for professional services pursuant to a written contract; and maintenance or service contracts for equipment or software where the work will best be performed by the manufacturer or installer, or by the authorized agent for the manufacturer or installer.
C. Purchases of More than $5,000 but Less than $25,000
- Any purchase by RAILS for services, materials, equipment or supplies, other than professional services, with a value greater than $5,000 but less than $25,000 shall be made, whenever feasible, on the basis of three or more competitive quotations.
- RAILS will dispose of any real or personal property in accordance with the Illinois Library System Act (75 ILCS 10/16).
D. Credit Cards/Accounts
- RAILS will maintain credit card accounts for the purchase of gasoline and emergency automobile supplies and repairs for RAILS vehicles.
- RAILS may maintain credit accounts with office supply, catering, department stores, and other services to meet needs of RAILS, with authorization of the RAILS Executive Director.
- RAILS may maintain credit card accounts for use by RAILS staff in conducting RAILS business. Such business will include the travel of RAILS staff and related expenses and must be documented with receipts to support all purchases.
X. Board of Directors
A. The members of the RAILS Board shall serve without compensation but their actual and necessary expenses shall be covered in accordance with the RAILS Travel Reimbursement Policy for the Board of Directors.
A. It is the policy of RAILS to reimburse full and part-time employees and RAILS Board of Directors members for reasonable authorized expenses incurred by them in the performance of their duties.
B. The RAILS Board of Directors shall develop a policy for the control of travel sufficient to prevent obligation of funds exceeding budget limitations and to hold travel to the minimum required for the efficient and economical conduct of the system's business. The procedure for the control of travel established by the board shall include a description of the system's travel approval procedure, allowable transportation expenses, non-reimbursable expenses, and rates of reimbursement for mileage, including automobile, air and train; per diem/meals; and lodging. Mileage for automobile travel shall be reimbursed at a rate no greater than the allowance rate in effect under regulations promulgated pursuant to 5 U.S.C. 5707 (b)(2). Rates for the reimbursement for expenses other than mileage shall not exceed the actual cost of travel as determined by the U. S. General Services Administration. Expense reports must be supported by original receipts that document allowable travel expenditures.
C. The RAILS Board of Directors will at least biennially review and revise travel reimbursement rates to reflect, as accurately as possible, the actual amounts necessary to reimburse employees. Examples of non-reimbursable expenses that shall be included in the Travel Control Policy include: alcoholic beverages; coat check; entertainment; meals for other system employees or board members or late checkout and room guarantee charges (unless special circumstances exist and Executive Director approval is obtained); parking tickets or other traffic tickets and charges associated with locksmith services; and transportation to procure meals, except under circumstances when such transportation is allowed by the Travel Control Policy.
D. Whenever possible and cost efficient, RAILS business travel arrangements will use governmental entity discount rates.
A. Member libraries are responsible for prompt payment of any financial obligations incurred as part of shared-cost programs such as shared automation costs, educational events, cooperative programs, and other obligations. Other organizations outside of RAILS will be held to the same standard.
B. Payments for invoices are due within thirty days from the statement date. After thirty days, invoices are considered overdue. RAILS staff is primarily responsible for collecting overdue invoices.
C. Overdue invoices will be considered delinquent after 90 days from the statement date on which the obligation was first billed. A finance charge may be assessed.
D. Reasonable costs incurred in collecting delinquent invoices may also be charged. Such costs include, but are not limited to, the following: (1) the cost of preparing and mailing demand letters, (2) legal expenses incurred, and (3) collection agency expenses incurred. These costs may also be subject to the same finance charge assessed on delinquent invoices.
E. Delinquent invoices will be considered in arrears after 120 days from the statement date. Alternatives such as service restriction, third party action, and membership termination may be pursued if an invoice is considered to be in arrears. Service restriction would be the cessation of services enjoyed by RAILS members such as, but not limited to, delivery services and automation privileges. Third party action could include, but not be limited to, the use of an outside service such as an attorney or collection agency to collect invoices in arrears. If service restrictions are imposed, the service restrictions will be targeted to the extent possible to the service billed on the delinquent invoice.
F. A member library may request a deferred payment plan if it is unable to meet its current financial obligations to RAILS. A deferred payment plan request must be submitted in writing for approval. Any deferred payment plan entered into will be for the purpose of assuring that the best interests of RAILS are served. RAILS does not have any obligation to accept deferred payments or partial payments on account. Failure of the member library to comply with an approved payment schedule will give RAILS the right to immediately continue the collection process without further notice to the member library.
A. Donations of money, securities, real property, library books or other materials, equipment, or services to RAILS may be accepted when such a gift or its acceptance:
- Contributes to the achievement of the RAILS' Long Range Plan.
- Does not conflict with RAILS policies.
- Does not impose any restriction on RAILS as a condition of the donation, unless such restriction is formally accepted by RAILS Board action.
- Is not likely to be perceived as an endorsement of an individual, a product, or a service.
- May be used or disposed of at the discretion of RAILS, unless otherwise mutually agreed to by the donor and the RAILS Board at the time of the donation. Any disposals will be disposed of in accordance with the Illinois Library System Act (75 ILCS 10/16).
- Determined to be in the best interest of the system.
B. Donation made or intended to be used to support regular RAILS operations funded in whole or in part by the System Area and Per Capita Grant funds shall be reported to and approved by the Illinois State Library before such donations may be accepted or expended.
C. Donations made in accordance with these guidelines may be accepted by the RAILS Executive Director. All donations of significance will be appropriately acknowledged and recognized by the RAILS Board.
D. Unless otherwise provided, arrangements for and the cost of an appraisal of a donation in the interest of a donor will be the donor's responsibility prior to the conveyance of the donation to RAILS.
A. RAILS fiscal year shall be July 1 through June 30.
B. The Annual Budget and Work Plan of the System will be prepared by the RAILS Executive Director and staff and recommended to the RAILS Board. From time to time, the RAILS Board may appoint a committee to work with the RAILS Executive Director for the purpose of developing the budget and plan of service.
A. An outside audit of all RAILS and grant accounts will be conducted annually. The audit report shall be reviewed and discussed at a RAILS' board meeting with the auditor.
B. The RAILS Executive Director will, at least every 5 years, solicit bids from at least three auditing firms based on recommendations of Board Members and administrative staff.
C. Audits of RAILS and grant funds will be submitted to the Illinois State Library in accordance with Illinois Library System Act, grant guidelines, and applicable financial reporting requirements in accordance with generally accepted accounting principles.
[FN1] A line of credit is a pre-established amount of credit extended to a borrower by a lender that the borrower can draw against as needed.