MINUTES OF THE

BAY COUNTY LIBRARY SYSTEM

BOARD OF TRUSTEES

FINANCE COMMITTEE

August 18, 2003

Ella Jane Martini, Chairperson, called the Finance Committee meeting to order at noon on

August 18, 2003 in the fourth floor conference room at the Bay County Building.

Roll Call Present: Michael Gray and Ella Jane Martini

Excused: Howard Wetters

Others: Kevin Ayala, Trish Burns, Jim Hammond, Linda Heemstra, Steve List, Steve Neavling, Mike Regulski and Eileen Schulz

Due to time constraints of those present, two items of new business were moved to the top of the agenda.

NEW BUSINESS

Transferring Library Construction Assets to the Bay County Building Authority - Mike Regulski, Bay County Finance Officer, referred to a letter in board packets from Kevin Ayala regarding the library building projects and construction work as it applies to the final 2002 fiscal year audit. After completing the 2002 audit for the library, Tom Smith, managing auditor for Rehmann Robson, raised a concern that the library and Building Authority are carrying a portion of the construction work in progress on both sets of books. Rehmann Robson recommends that the library should transfer all construction costs/assets over to the Building Authority, the owner of the assets. M. Regulski agrees with this recommendation and advised that the library can accomplish this by adjusting book entries. He stated it will have no impact on the financial condition of the library. K. Ayala’s letter lists the entries that will need to be transferred.

Motion by M. Gray, seconded by E. J. Martini, to recommend to the full board the approval of library construction project asset transfers from the library to the Building Authority. Motion carried.

Library Project Furniture, Fixture & Equipment Purchases - M. Regulski recommended that the Bay County Library System, rather than the Building Authority, should purchase all furniture, fixtures and equipment for the new and renovated libraries. This will emphasize the library’s responsibility to tag, inventory, authorize asset transfers and manage any dispositions, etc. If the Building Authority would be the purchaser, these issues would become their responsibility. It is a recommendation of the Bay County Finance Department that the library issue the purchase orders and write the checks to pay for furnishings, fixtures and equipment. M. Regulski stated that Bob Redmond concurs with this recommendation.

Motion by M. Gray, seconded by E. J. Martini, to concur with Mike Regulski that the library purchase all furniture, fixtures and equipment for the new and renovated libraries. Motion carried.

OPEN TO THE PUBLIC

There was no public input.

MINUTES

Michael Gray requested that clarification be made in the June 30, 2003 committee minutes to reflect that it was discussed by the committee that if there are attachments to minutes for informational purposes, or if attachments are included within a motion, that these items be properly labeled listing the date and the meeting in which they were brought. They are to be designated by some style of a numbering system in order to refer back to their origin.

Motion by M. Gray, seconded by E. J. Martini, to approve the June 30, 2003 minutes with the discussed clarifications. Motion carried.

UNFINISHED BUSINESS

Library Cooperative Membership Options - Trish Burns referred to information in the committee packet, stating that Midland and Saginaw libraries have decided to transfer membership from the White Pine Library Cooperative to the Mideastern Michigan Library Cooperative. BCLS administration believes it would be an opportune time for our library to do so as well. T. Burns reviewed with trustees a spreadsheet included in the packet which outlined the cost of making this change. She pointed out that other cooperatives that are geographically close to Bay County Library System keep the state aid funding. In comparison, the Mideastern Michigan Library Cooperative allows individual library members to choose how they wish to use this “swing aid” revenue. She also pointed out that White Pine has many small libraries and has become a cooperative, which places more emphasis on services for smaller libraries. In contrast, the Mideastern Michigan Library Cooperative has many larger, Class V and VI libraries as its members.

M. Gray asked whether or not libraries are allowed representation on the Mideastern Michigan Library board. He suggested that the committee could recommend joining this cooperative but make the decision conditional based on whether board representation would be available for the Bay County Library System. L. Heemstra said she believes there would be representation; however; administration will check into this and bring a report to the board for discussion.

Motion by M. Gray, seconded by E. J. Martini, to recommend approval by the library board of trustees to join the Mideastern Michigan Library Cooperative based on the assurance the Bay County Library System will have board representation. Motion carried.

Update on Unresolved Issues in Preparation for selling Bay City and Pinconning libraries - L. Heemstra referred to information from Jim Hammond in committee packets regarding the Quit Claim Deeds from the City of Bay City and from the County, both reporting the withdrawal of reverter clauses for the Bay City Branch property. In this regard, J. Hammond stated the property is ready to sell. The only item that remains is to obtain clear title for the property. J. Hammond stated that, based on what information he has on the Bay City Branch, his investigation found that the property was subject to a reverter that needed to be cleared, which has been done. He has not yet seen an abstract of the property, and, in order for him to form an opinion on whether there’s a clear title, an abstract would need to be prepared in an efficient way to handle this. J. Hammond suggests, however, waiting until such time as there is an interested buyer because title insurance commitment would specify what if any conditions there are. M. Gray asked if title insurance at the time of sale would replace doing an abstract. J. Hammond explained that title insurance insures the purchaser.

Naming Opportunity Update - L. Heemstra discussed the revised, merged list, which includes additional naming opportunities discussed at February and March meetings, and sought clarification on the board’s preferred direction for recently added items. She noted the lighthouse, aquarium, and boat with boardwalk are listed but have the stipulation attached that these would be funded outside of the capital campaign. M. Gray suggested creating two separate lists rather than using asterisks to denote those specific items to avoid confusion. E. J. Martini said that these are interesting items that people will want to give to. Donations will make these features possible.

L. Heemstra discussed the amount set for the clock tower for Central, which is currently listed for $100,000. Mark Oetting, Skanska, estimated the actual cost of the clock tower at approximately $170,000. That estimate, however, included the second floor tower lounge, which currently has been selected as a $30,000 naming opportunity, and the first floor lobby, which is included with a $250,000 naming opportunity for the front vestibule, lobby, and open space in front of the circulation desk back to the stairway. She explained it was difficult to determine the cost for just the clock tower and asked trustees if they thought the $100,000 value is adequate or whether it should be changed. L. Heemstra said that there may be an interested donor for the clock tower. Committee members concurred that $100,000 seemed a reasonable value.

The second question is whether or not trustees would want to pull out the various collections also currently on the naming opportunity. L. Heemstra explained that the value of the collections already selected as naming opportunities so far totals $65,000. Additional subject area collections on the naming opportunity list could bring the total donation for collections to $205,000. The library improvement budget includes $90,000 for collections at Central. She suggested pulling out all collection naming opportunities that would put the donated total above $90,000. These could still be listed and funding sought, but the donations would be outside the goal of the Capital Campaign.

K. Ayala pointed out that the $90,000, while not in the construction portion of the budget, is in the “other costs” portion and is included in the $26.8 million total project cost. Capital campaign donations go to support the total project cost.

M. Gray said the collection items should be left on the list. It is also important that donations for items not in the project budget not be counted toward the campaign goal. The dollars the capital campaign raises is being counted on for bricks and mortar. He asked L. Heemstra to communicate to the fundraising committee that the board is not quibbling about the amount of money; the point is that money not be accounted for twice.

2004 Budget Hearing - K. Ayala reported that administration attended the county’s budget hearing on the library’s 2004 proposed budget. This was the budget approved by library trustees in June. The county proposed no changes in the operating budget and will include it in their published budget. K. Ayala explained to the county that the library expects to make changes to the budget following collective bargaining and receipt of health care rate increases later this year.

NEW BUSINESS

Final 2002 Year End Audited Financial Report - K. Ayala reported the 2002 year end audit, which was included in board packets, was positive. He cautioned, however, that the undesignated fund balance at the end of 2002 is only $213,000. He said that as a guideline it is best to keep a fund balance not lower than 5%. Because over the last few years the account has been slowly depleted, we are now getting close to this percentage. He recommended that, as the library system moves into the coming years with the renovated and new buildings that will bring with them increased costs; the library make every effort not to use this money. He pointed out that 2002 was a difficult year from a budgeting perspective. The library dealt with less available revenue due to lower interest rates, reduced penal fines, and less state aid dollars. M. Gray noted there are now steps in place to assure the overages that happened in 2002 will not happen again. K. Ayala agreed with this and shared that managing librarians have been very diligent in watching their branch budgets.

E. J. Martini asked about the results of the Friends’ Book Sale. Staff shared that the sale brought in approximately $18,758, slightly less than last year. Art from the discontinued lending art collection that did not sell through the Studio 23 sale was included in the book sale. It sold rapidly. K. Ayala reported the County auction brought in approximately $3,000-$4,000 from the sale of miscellaneous equipment from Sneaky Pete’s and other recently purchased properties. L. Heemstra also noted that the library will be holding an auction of furniture and equipment from Sage and Auburn libraries once these branches move back to the renovated buildings.

Revenue Enhancement Ideas/Options - Trustees reviewed the suggested revenue enhancement ideas presented by staff. K. Ayala asked for input from the committee to determine whether or not the following options would be something that trustees would want staff to pursue further or implement. (a) Book Purchasing Program partnership with Amazon and Barnes and Noble. K. Ayala explained that this program would generate proceeds of 2%-15% of a book’s cost, depending on what was purchased. An Internet link would be placed on the library’s web page and any purchases made by a customer accessing Amazon or Barnes and Noble from the library’s link would result in proceeds for the library. E. J. Martini asked if shoppers could participate in this program by making purchasers in the actual store. K. Ayala did not know if this would be an option but would look into it. (b) Charge for Computer Classes. Staff suggested charging $5 per computer class as a way to raise revenues. Trustees noted there are considerable costs for these same classes elsewhere and a $5.00 fee would be nominal. (c) Late fees for overdue children’s materials. Currently the library charges only $.02 per item, and staff suggested increasing this fee to $.05 per item. This increase would put the library in line with all other libraries within the White Pine Cooperative. (d) Charge $0.15/copy for all copies made on a computer printer. Currently the first five copies are free. Staff explained there are many times patrons will print more copies than five, then decide afterward they do not want the copies or simply leave them. Also, the change to $0.15 will bring computer printer copies in line with the fee for photocopies made on coin operated copy machines. Staff pointed out that much staff time is used trying to monitor the “first five prints free” policy. E. J. Martini suggested bringing all revenue enhancement ideas to the full board for discussion.

Motion by M. Gray, seconded by E. J. Martini, to recommend to the full board the approval of charging $0.15 for printer copies; increasing overdue fees on children’s material from $.02 to $.05 per item; charging $5 for each computer class and promoting Internet purchasing from Amazon and Barnes and Noble through library web page link. Motion carried.

VLC Membership Renewal - Trustees reviewed the VLC contract submitted for renewal. L. Heemstra stated the library has been a member since 1992 and this renewal is for three years. She reported that Trish Burns represents the Bay County Library System on the Valley Library Consortium Board and on the White Pine Library Cooperative Board.

Motion M. Gray, seconded by E. J. Martini, to recommend approval of the VLC Membership Renewal. Motion carried.

At 1:35 p.m., Motion by M. Gray, seconded by E. J. Martini, to adjourn to Closed Session.

Roll Call: M. Gray-yes; E. J. Martini-yes. Motion carried. H. Wetters was excused.

Closed session was called to consider strategy connected with the negotiation of a collective bargaining agreement, as provided for under PA 167 of 1976.

At 2:04 p.m. trustees returned to open session.

The next meeting date will be at the call of the chair.

Motion by M. Gray, seconded by E. J. Martini, to adjourn the meeting. Motion carried.

______________________

Eileen Schulz

Recording Secretary